Natural Gas and Oil Forecast: Tightening IEA Supply Outlook Clashes With OPEC’s Balanced View

Commodity

Summary:

Oil edged higher on geopolitical risks but stayed pressured by bearish technicals, while natural gas broke key supports. The IEA sees tighter supply ahead, clashing with OPEC’s balanced outlook.

Market Overview

Oil prices inched higher on Friday as escalating geopolitical tensions revived concerns about supply disruptions, though the market remained on track for a weekly loss amid optimism over progress in broader peace negotiations. The risk of additional tanker seizures heightened fears of reduced crude flows, prompting a rebound in buying after earlier selling pressure.

Analysts noted that a credible diplomatic breakthrough could unlock sanctioned supply, potentially pulling WTI toward the $55 range.

Meanwhile, the International Energy Agency raised its 2026 demand forecast and trimmed supply expectations, signaling a tighter market ahead, even as OPEC projected a more balanced global outlook.

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

Natural Gas is trading near $4.21 after a sharp breakdown from the rising trendline that supported the rally through November. The selloff accelerated once price sliced below $4.37 and $4.31, both former support zones now acting as resistance. Candlesticks show multiple lower highs and strong bearish bodies, confirming sustained seller control.

If downside momentum continues, the next support sits at $4.13, followed by $4.02 and $3.91, where prior consolidation pauses occurred. A deeper move could retest the broader base near $3.86. For buyers, a recovery above $4.31 is needed to challenge $4.37 and $4.49, but EMAs remain firmly downward-sloping.

WTI Oil Price Forecast

WTI Price Chart

WTI Crude Oil is trading near $57.95, holding below a descending trendline that has capped price since the December high. Recent candles show rejection near $58.21, confirming it as immediate resistance. The 20-EMA and 50-EMA remain above current price, reinforcing bearish structure and showing sellers are still in control.

If price stays below the trendline, downside pressure could extend toward $57.12, a level tested multiple times this week. A break below that exposes $56.60, followed by deeper support near $56.14. Candlestick bodies remain small, indicating hesitation but still favoring lower highs.

On the upside, bulls need a firm close above $58.21 to challenge the trendline and potentially retest $59.05. RSI is hovering near 40, showing weak momentum without oversold conditions, allowing room for further declines.

Brent Oil Price Forecast

Brent Price Chart

Brent Crude is trading near $61.59, holding below a descending trendline that has capped price since the December high. Recent candles show repeated rejection near $61.85, confirming it as immediate resistance and aligning with the 20-EMA, which continues to slope lower. This keeps bearish pressure intact.

If sellers maintain control, downside levels to watch include $60.91, followed by $60.36 and $60.10, where prior reactions formed intraday floors. A break below these zones would open the path toward $59.90.

For bulls to gain momentum, Brent needs a clean breakout above $61.85 to challenge $62.72 and the broader trendline.

Source: fxempire

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Gerik

Economic

Commodity

Oversupply Fears Anchor Oil Prices Below $62

Crude markets are struggling to gain upward momentum even as broader financial markets rally on optimism sparked by the Federal Reserve’s interest rate cut and its confident economic outlook. Brent crude futures, the global oil benchmark, hovered just above $61 per barrel on Friday, December 12, 2025 close to their lowest levels since mid-October.

This stagnation reflects a divergence in investor sentiment: while equity markets eye new highs, oil remains bogged down by fundamentals, particularly supply dynamics. According to the International Energy Agency (IEA), global oil inventories have ballooned to a four-year high. The agency reiterated its forecast of a significant surplus in 2026, slightly trimmed from its previous estimate but still historically high.

This reinforces a bearish undertone in oil markets. Brent has been range-bound for nearly two months, fluctuating between $60 and $67, with growing downside pressure as inventories swell and demand growth lags behind expectations. Traders appear cautious, unwilling to commit to bullish oil positions despite increased risk appetite in other asset classes.

Traders Cautious Despite Risk-On Mood Elsewhere

Haris Khurshid, Chief Investment Officer at Chicago-based Karobaar Capital LP, noted that while investors are embracing risk in equities and credit, the same enthusiasm hasn’t translated to crude oil. "The fundamental surplus hasn’t gone anywhere," he said, underscoring that market technicals remain vulnerable to inventory data and production metrics.

The disconnect between energy and equity markets is especially stark now. While the S&P 500 and global equity benchmarks flirt with record highs, oil lacks a meaningful catalyst. The Fed’s rate cut may reduce borrowing costs and stimulate broader economic activity, but it has not yet translated into higher energy consumption or confidence in future oil demand.

IEA’s Surplus Warning: A Drag on Price Recovery

The IEA’s latest monthly report, released Thursday, warned of an “unprecedented surplus” next year, driven by non-OPEC production increases and softening demand from key markets, including China and the EU. Even with voluntary cuts from OPEC+ producers, the agency expects global stockpiles to continue rising, particularly in developed economies.

This forecast undermines bullish narratives tied to geopolitical tensions, reinforcing traders’ focus on fundamentals over headlines. Crude is facing headwinds from both supply-side resilience and demand-side ambiguity. With inventories at a four-year peak, there is little immediate incentive for upward price reversion, especially as winter demand remains mild in the Northern Hemisphere.

Geopolitical Flashpoints Offer Limited Support

President Trump’s recent moves against Venezuela added a flash of geopolitical drama this week. The U.S. seized a large supertanker carrying Venezuelan crude off the country’s coast and followed up with sanctions on six oil tankers and three of President Nicolás Maduro’s nephews. The Biden administration had previously taken a softer stance on Venezuela’s oil exports, but Trump’s return to a “maximum pressure” doctrine appears aimed at cutting off Maduro’s oil revenues.

While such measures often tighten supply in specific grades or markets, analysts note that Venezuela’s overall export capacity is limited and unlikely to meaningfully impact global balances. Unless tensions escalate further or disruptions hit a major producer like Iran or Russia geopolitical events may only offer brief price support.

Oil’s Fragile Balance Going Into 2026

Looking ahead, oil prices are likely to remain under pressure as traders weigh macroeconomic optimism against a stubborn supply glut. Unless demand indicators improve meaningfully or major producers take deeper cuts, Brent may test the psychological $60 floor in coming weeks.

Market watchers are increasingly concerned that crude’s underperformance could signal broader doubts about industrial demand strength, particularly if China’s recovery falters or European energy use remains weak. For now, oil bulls will have to wait for either a geopolitical jolt or a concrete shift in global consumption patterns to break free from this bearish range.

Source: Bloomberg

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Justin

Political

Economic

Stocks

PepsiCo Inc. offers Walmart Inc. special product promotions and discounts that it doesn't offer to any other retailers, according to a Biden-era antitrust complaint that was unsealed by a court.

Details of a now-dismissed Federal Trade Commission complaint were made public by a judge Thursday in response to a request by an antimonopoly advocacy group, the Institute for Local Self-Reliance. The agency revealed that Walmart was the retailer that received special advantages in a filing Thursday.

The FTC in January voted 3-2 to file the lawsuit against PepsiCo, alleging the company violated the law by charging small retailers higher prices than they do for beverages sold to a large multinational chain store. The agency didn't publicly disclose the name of the retailer in the original complaint, and the Trump FTC in May dismissed the case.

In the unsealed complaint, the FTC said PepsiCo recognizes Walmart as its "most important customer," citing a 2023 regulatory filing where it told investors losing the company as a customer would have a "material adverse effect" on its business.

PepsiCo provides Walmart with promotional payments, allowances and services "to keep Walmart happy," according to the complaint, "while failing to make similar benefits available to Walmart's competitors on proportionally equal terms."

According to the FTC complaint, that conduct disadvantages smaller retailers including convenience stores that compete with Walmart to sell Pepsi and other soft drinks, including Mountain Dew, and Rockstar Energy drinks.

The FTC lawsuit was filed just days before Donald Trump was sworn in as president. The agency, now staffed entirely by Republicans after Trump fired its two Democrats, said in May that it was dismissing the case because it was poorly conceived.

At the time, FTC Chair Andrew Ferguson said in a statement that "the Biden-Harris FTC rushed to authorize this case just three days before President Trump's inauguration in a nakedly political effort to commit this administration to pursuing little more than a hunch that Pepsi had violated the law.'

Walmart said in a statement that the company remains "committed to negotiating on behalf of our customers so we can deliver value and everyday low prices," noting that the FTC voluntarily dismissed the case.

PepsiCo didn't immediately respond to request for comment, but had denied wrongdoing when the case was filed. The FTC also didn't immediately respond to a request for comment on the unsealed complaint.

The FTC's complaint alleged that PepsiCo violated a rarely invoked 1930s law called the Robinson-Patman Act that bars price discrimination against retailers. Biden's FTC Chair Lina Khan advocated for greater use of the law, arguing that its under-enforcement has harmed smaller retailers.

Earlier this week PepsiCo said it would reduce prices in its key brands as part of an agreement with activist investor Elliott Investment Management.

The case is Federal Trade Commission v PepsiCo Inc., 25-cv-664, US District Court, Southern District of New York.

Source: Bloomberg Europe

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Gerik

Economic

AI’s Dual Role: Economic Engine and Political Liability

Throughout his first year back in office, President Donald Trump has made artificial intelligence a cornerstone of his economic strategy and political messaging. Backed by surging tech sector investments and optimistic economic forecasts, Trump has signed executive orders to promote AI expansion and reduce regulatory barriers, including preempting state-level restrictions.

From the White House to Wall Street, AI is hailed as the growth catalyst driving over half of U.S. GDP gains in the first half of 2025. Massive capital expenditures from tech giants like Google, Meta, and Amazon are projected to exceed $500 billion in 2026. Markets have responded, with AI-linked stocks powering much of the S&P 500's gains this year.

Yet the very infrastructure enabling this boom data centers is now facing growing resistance from the American public. The tension mirrors earlier controversies surrounding globalization and automation: while AI promises long-term gains, many voters fear short-term losses in jobs, affordability, and environmental stability.

Backlash at the Local Level: Data Centers Meet Community Resistance

Local opposition to data center developments is mounting. Voters in multiple districts across Virginia, New Jersey, and Ohio recently expressed concern over the rising electricity bills, land use, and limited permanent job creation tied to AI infrastructure.

Data Center Watch reported that nearly $100 billion in planned investments faced delays or cancellations in Q2 2025 more than all previous quarters combined since 2023. The backlash reflects deeper anxieties about whether these projects truly benefit communities or merely burden them with higher utility costs and environmental risks.

In Lordstown, Ohio, a town that lost nearly 40% of its manufacturing jobs over the past two decades, a proposed $3.6 billion data center project has met fierce opposition. Despite developer promises of state tax revenue and high-paying construction jobs, residents and local officials are skeptical about the lasting benefits of a facility that will employ only 120 full-time workers post-completion.

Lordstown Council President Robert Bond summarized local concerns: “We don’t see the advantage tying up large industrial acreage for 120 jobs.”

Energy Inflation: Electricity Costs Become a Political Flashpoint

Electricity prices have emerged as a central issue in the AI debate. Power-intensive data centers are driving up regional energy demand, with some voters likening the affordability pressure to fuel prices a long-standing barometer of political satisfaction.

Trump administration insiders now admit that among Republican governors, there’s growing concern that AI infrastructure could trigger a broader utility cost backlash. Ohio Governor Mike DeWine remains optimistic, citing long-term economic spillovers, but the administration is expected to respond by fast-tracking a new executive order on expanding and modernizing the electric grid.

This planned order will focus on boosting transmission capacity and updating grid technology both crucial for managing AI’s future energy demands while keeping household costs stable.

Employment and Social Stability: Echoes of the Free Trade Debate

Beyond electricity bills, the public is increasingly worried about AI’s labor market implications. While AI firms argue that the technology will enhance worker productivity, many fear that automation will erase more jobs than it creates. These fears echo the economic displacement experienced during the offshoring and automation waves that once fueled populist sentiment the same populism that helped Trump rise to power.

Even within Trump’s base, voices like Steve Bannon are warning that AI could become the next elite-driven disruption to hit working Americans. On his “War Room” podcast, Bannon criticized tech firms for using worker productivity “until they get the robots and then they’ll toss you aside like trash.”

The administration has responded by expanding Department of Labor investments in workforce reskilling and infrastructure employment but the long lead times between training and benefits leave a political vulnerability heading into 2026.

Wall Street vs. Main Street: AI Bubble or Structural Growth?

There’s a growing divide between financial markets and public sentiment. Analysts widely agree that AI is responsible for the majority of stock market gains in 2025. However, some, including Oaktree Capital’s Howard Marks, have called the employment risks “terrifying” and are urging caution.

Investors are now factoring in political and regulatory risks, especially as delays in data center builds and state-level friction add cost and uncertainty. Meanwhile, the long U.S. government shutdown earlier this year has left economists without clear, timely data to assess how AI is reshaping productivity, inflation, and employment leaving markets and policymakers somewhat in the dark.

AI as a Political Wildcard Heading Into 2026

For Trump, AI is both a symbol of American technological dominance and a tool for economic growth. But politically, it’s becoming a liability if voters perceive its benefits as flowing to corporate elites while households face higher costs and uncertain job prospects.

Democrats, sensing opportunity, have begun crafting voter-friendly narratives focused on protecting communities from AI-related shocks. In the absence of a unified policy strategy from either party, AI is becoming a “political football,” as one Trump adviser put it with its future shaped not just by innovation or regulation, but by the 2026 election and the voices of communities trying to navigate a new economic reality.

The administration now faces a critical choice: double down on AI-led expansion without addressing public fears, or recalibrate the message and policy to ensure that voters don’t feel left behind by the very growth that’s fueling the markets.

Source: Bloomberg

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Adam

Commodity

KEY POINTS:

The Fed delivered on expectations cutting by 25 bps and signalling a higher bar for further rate cuts

Fed Chair Powell sounded dovish by downplaying inflation risk and emphasising labour market weakness

Gold broke out of the two-week long consolidation and extended the gains as momentum increased

FUNDAMENTAL OVERVIEW

Gold finally broke out of the consolidation below the 4245 level yesterday and extended the gains above the 4300 level this morning.

There was no fundamental catalyst for the move as the US initial claims came out basically in line with the recent releases and continuing claims, despite beating expectations by a big margin, were dismissed due to holiday distortion.

The rally was mostly technical as the breakout triggered stops and saw more buyers piling in to target new highs. Nonetheless, despite the Fed delivering on expectations, the dovish Fed Chair Powell tone acted as a tailwind for precious metals.

Looking ahead, the main risk events for gold will be the NFP and CPI reports next week. Strong data should weigh on the precious metal and trigger a correction, while weak figures will likely give it a further boost.

In the bigger picture, gold should remain in an uptrend as real yields will likely continue to fall amid the Fed’s dovish reaction function. But in the short term, a further hawkish repricing in interest rate expectations should weigh on the market.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Gold - daily

On the daily chart, we can see that after breaking above the 4245 level, the buyers extended the gains into the 4280 level. The natural target should be the all-time high around the 4381 level.

If the price gets there, we can expect the sellers to step in around the all-time high with a defined risk above it to position for a drop back into the 3887 level. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new all-time highs.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

Gold - 4 hour

On the 4 hour chart, we can see more clearly yesterday’s breakout. If we get a pullback into the 4245 resistance-turned-support, we can expect the buyers to step in with a defined risk below the support to keep pushing into the all-time high. The sellers, on the other hand, will want to see the price breaking lower to extend the pullback into the 4150 support next.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

Gold - 1 hour

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. We can expect the buyers to lean on the trendline with a defined risk below it to keep pushing into new all-time highs, while the sellers will look for a break lower to pile in for a drop into the 4245 support targeting a break below it. The red lines define the average daily range for today.

UPCOMING CATALYSTS

Next week we have the US NFP report on Tuesday and the US CPI on Thursday. Huge week!

Source : investinglive

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Adam

Economic

‘Tempus fugit, ’ as we cry out at closing time in my local Wetherspoons.

We’re already more than a quarter of the way through December and speeding at full throttle towards year-end.

Where has the time gone? The Federal Reserve has just held its last meeting of 2025 and cut interest rates by 25 basis points, as expected.

Ahead of the decision, analysts were calling for a ‘hawkish cut’, and that is pretty much what was delivered.

The FOMC’s ‘Dot Plot’ (part of the quarterly Summary of Economic Projections) had a median forecast of just one-quarter-point cut next year, probably in the first half.

But there was a great deal of dispersion across the dots.

Out of the nineteen FOMC members, one anticipates six cuts next year (that would take the Fed Funds rate down to 2.00-2.25% from current levels, well below inflation forecasts), while at the other end, three members see one rate hike.

According to the CME’s FedWatch Tool, the ‘real money’ sees one, maybe two reductions, which is pretty much in line with the Fed itself.

We now have another twelve months to go before we’ll know how accurate this prediction turns out to be.The Fed’s current rate-cutting cycle began back in September 2024 when they surprised most people by announcing a 0.50% reduction.

This was double the forecasts, and somewhat controversial given that it came just two months before the Presidential Election.

The Fed made two further quarter-point cuts before the year-end, before going on hold until this September, blaming the possible inflationary effects of tariffs.

This drew the ire of President Trump, who felt that the US central bank had politicised monetary policy, and he may have a point.

Overall, rates were reduced by 100 basis points last year, and a further seventy-five points in 2025, for a total of 175, taking the Fed Funds rate range down to 3.50-3.75%, its lowest in over three years.

All that monetary stimulus was a pretty powerful tailwind for risk assets, which, given yesterday’s forecast, will lose a lot of its force going forward. Despite this, the FOMC vote breakdown shows little appetite for raising rates, so that’s a blessing.The rest of the FOMC’s Summary was also quite upbeat. Members upgraded their growth outlook for next year.

They now expect GDP growth of 2.3%, up from 1.8% in September.

Inflation (as measured by Core PCE) is expected to moderate to 2.5% by the end of 2026, down from its current reading of 2.8% annualised, and below September’s prediction of 2.6%. It is still expected to hit the Fed’s 2% target in 2028.

Meanwhile, Unemployment is forecast to hold steady at 4.4%, which remains historically low.

All in all, that’s a fairly solid set of forecasts, which was enough to see risk assets rally and the US dollar fall.

In his subsequent press conference, Chair Jerome Powell said that the Fed was now in ‘wait and see’ mode, as is Mr Powell himself.

His second term as Chair ends in May, yet speculation over the identity of his successor has been swirling around since President Trump’s inauguration in January.

Mr Trump has said he has decided on his preferred candidate, and Treasury Secretary Scott Bessent has suggested that this could be announced before Christmas.

Kevin Hassett, the current Director of the National Economic Council, is considered the shoo-in candidate.

He’s a well-known Trump supporter and a well-known dove.

But Kevin Warsh can’t be ruled out either. He has served as a member of the Federal Reserve Board of Governors and is a Republican.

He’s also a handsome chap, which may give him an edge over Mr Hassett in President Trump’s eyes. Let’s keep the Administration beautiful.What does all this mean? Well, there’s some uncertainty creeping in over at the Fed, and evidence of growing diversity of expressed opinions.

It also feels as if the rule of the Chair won’t be quite as absolute as it has been in the past.

These aren’t bad things. It’s time that the Fed had a bit of a shake-up. But once his replacement is named, Jerome Powell’s life is going to get a lot harder.

There will effectively be two Fed Chairs for the next five months, and both will be scrutinised intensely.

Disagreements will be highlighted. And that has the potential to affect decision-making negatively.

Source: invezz

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James Whitman

Palestinian-Israeli conflict

Political

● International troops in Gaza would deploy in Israeli-held areas, say US officials

● ISF will not fight Hamas, say US officials

● Indonesia plans to send 20,000 troops for health and construction tasks

International troops could be deployed in the Gaza Strip as early as next month to form a U.N.-authorized stabilization force, two U.S. officials told Reuters, but it remains unclear how Palestinian militants Hamas will be disarmed.

The officials, speaking on condition of anonymity, said the International Stabilization Force (ISF) would not fight Hamas. They said lots of countries had expressed interest in contributing and U.S. officials are currently working out the size of the ISF, composition, housing, training and rules of engagement.

An American two-star general is being considered to lead the ISF but no decisions have been made, the officials said.

Deployment of the force is a key part of the next phase of U.S. President Donald Trump's Gaza peace plan. Under the first phase, a fragile ceasefire in the two-year war began on October 10 and Hamas has released hostages and Israel has freed detained Palestinians.

"There is a lot of quiet planning that's going on behind the scenes right now for phase two of the peace deal," White House spokesperson Karoline Leavitt told reporters on Thursday. "We want to ensure an enduring and lasting peace."

INDONESIA PREPARING TROOPS

Indonesia has said it is prepared to deploy up to 20,000 troops to take on health and construction-related tasks in Gaza.

"It is still in the planning and preparation stages," said Rico Sirait, spokesperson of Indonesian Defence Ministry. "We are now preparing the organizational structure of the forces to be deployed."

Israel still controls 53% of Gaza, while nearly all the 2 million people in the enclave live in the remaining Hamas-held area. The plan - which needs to be finalized by the so-called Board of Peace - is for the ISF to deploy in the area held by Israel, the U.S. officials said.

Then, according to the Trump peace plan, as the ISF establishes control and stability, Israeli troops will gradually withdraw "based on standards, milestones, and timeframes linked to demilitarization."

A U.N. Security Council resolution adopted on November 17 authorized a Board of Peace and countries working with it to establish the ISF. Trump said on Wednesday that an announcement on which world leaders will serve on the Board of Peace will be made early next year.

DEMILITARIZING GAZA

The Security Council authorized the ISF to work alongside newly trained and vetted Palestinian police to stabilize security "by ensuring the process of demilitarizing the Gaza Strip, including the destruction and prevention of rebuilding of the military, terror, and offensive infrastructure, as well as the permanent decommissioning of weapons from non-state armed groups."

However, it remains unclear exactly how that would work.

U.S. Ambassador to the U.N. Mike Waltz noted on Thursday that the ISF was authorized by the Security Council to demilitarize Gaza by all means necessary - which means use of force.

"Obviously that'll be a conversation with each country," he told Israel's Channel 12, adding that discussions on rules of engagement were under way.

Hamas has said the issue of disarmament hasn't been discussed with them formally by the mediators - the U.S., Egypt and Qatar - and the group's stance remains that it will not disarm until a Palestinian state is established.

Israel's Prime Minister Benjamin Netanyahu said in a speech on Sunday that the second phase would move toward demilitarization and disarmament.

"Now that raises a question: Our friends in America want to try and establish a multinational task force to do the job," he said. "I told them I welcome it. Are volunteers here? Be my guest," Netanyahu said.

"We know there are certain tasks that this force can perform ... but some things are beyond their abilities, and perhaps the main thing is beyond their abilities, but we will see about that," he said.

Reporting by Steve Holland and Michelle Nichols, additional reporting by Gribran Peshimam in Jakarta and Maayan Lubell in Jerusalem, Editing by William Maclean