U.S. Trade Deficit Narrows Sharply in September, Lifting Q3 Growth Outlook

World oil supply will match demand closely in 2026, OPEC data published on Thursday indicated, an outlook contrasting with projections from the International Energy Agency and others of a huge glut.

The OPEC+ group comprising the Organization of the Petroleum Exporting Countries, Russia and other allies plans to pause production hikes in the first quarter of 2026, amid widespread predictions of oversupply.

In a monthly report on Thursday, OPEC said that OPEC+ pumped 43.06 million barrels per day of crude in November, up 43,000 bpd from the previous month, as the latest output hike agreement took effect.

The report forecast demand for OPEC+ crude will average 43 million bpd in 2026, unchanged from last month and close to what OPEC+ produced in November. OPEC forecast demand for its crude at 42.6 million bpd in the first quarter.

Should OPEC+ keep pumping at November's rate in 2026 and other things remain equal, production would be 60,000 bpd higher than demand, according to a Reuters calculation based on the OPEC report.

This contrasts with the view of the IEA, which earlier on Thursday implied global oil supply will exceed demand by almost 3.84 million bpd - an amount equal to almost 4% of world demand - next year.

In its report, OPEC also kept its forecasts for 2025 and 2026 world oil demand growth unchanged and said the world economy remained on a solid footing.

Source: Reuters

Canada recorded a merchandise trade surplus in September, the first time since January, as exports rebounded sharply while imports declined.

The trade in goods balance shifted from a deficit of $6.4 billion in August to a surplus of $0.2 billion in September, according to Statistics Canada data. Total exports of goods increased 6.3% to $64.2 billion, while total imports of goods decreased 4.1% to $64.1 billion.

When combined with services, Canada's overall trade balance amounted to a surplus of $0.3 billion in September.

The monthly international trade in services surplus remained essentially unchanged from the previous month at $0.2 billion. Imports of services rose 0.8% to $19.8 billion, while exports of services increased 0.7% to $20.0 billion.

Commercial services were the main driver of changes in both imports and exports. Imports of commercial services rose 2.4% to $11.6 billion, primarily due to an increase in financial services. This overall increase was partially offset by decreases in imports of travel services, which fell 1.9% to $4.9 billion, and transportation services, which declined 0.8% to $3.3 billion.

On the export side, commercial services climbed 0.9% to $12.2 billion. Exports of travel services increased 0.7% to $5.8 billion, mostly due to higher spending in Canada by travelers from the United States. Transportation service exports remained essentially unchanged at $1.9 billion.

"There's plenty more hurdles still for Canadian trade to pass, given continued US tariffs and CUSMA renegotiations looming," cautioned CIBC economist Andrew Grantham. "Q3's rebound was partly a result of second quarter trade flows falling lower than the underlying trend due to tariff front running in the first quarter. As a result, it wouldn't be a surprise if export performance weakened again during the fourth quarter, before seeing a more sustainable recovery during 2026."

Source: Investing

Market Overview

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

WTI Oil Price Forecast

Natural Gas (NG) Price Chart

Brent Oil Price Forecast

Brent Price Chart

Source: fxempire

The U.S. trade deficit unexpectedly narrowed in September, touching the lowest level in more than five years, as exports accelerated and imports rose marginally, suggesting that trade likely provided a boost to economic growth in the third quarter.

The trade gap contracted 10.9% to $52.8 billion, the lowest level since June 2020, the Commerce Department's Bureau of Economic Analysis and Census Bureau said on Thursday.

Economists polled by Reuters had forecast the trade deficit increasing to $63.3 billion. The report was delayed because of the 43-day shutdown of the government.

Exports climbed 3.0% to $289.3 billion in September. Goods exports surged 4.9% to $187.6 billion, with shipments of consumer goods increasing to a record high.

Imports rose 0.6% to $342.1 billion. Goods imports advanced 0.6% to $266.6 billion. But imports of automotive vehicles, parts and engines were the lowest since November 2022.

The goods trade deficit compressed 8.2% to $79.0 billion, the lowest level since September 2020.

President Donald Trump's protectionist trade policy, marked by sweeping tariffs, has caused big swings in the trade deficit, distorting the overall economic picture.

Trade sliced off a record 4.68 percentage points from gross domestic product in the first quarter before adding all that back to GDP in the April-June quarter.

Prior to the trade data, the Atlanta Federal Reserve estimated GDP increased at a 3.5% annualized rate in the third quarter. The government will release its first estimate of third-quarter GDP on December 23 after it was delayed by the longest shutdown in history.

The economy grew at a 3.8% pace in the April-June quarter.

Source: Kitco

Mizuho Financial Group Inc.'s chief executive officer expressed optimism that momentum in investment banking will continue both at home and in the US, where Japan's third-biggest lender has been expanding.

Tokyo-based Mizuho has completed the integration of US boutique investment bank Greenhill & Co., which it purchased two years ago, and is now reaping the benefits, CEO Masahiro Kihara said in a Bloomberg Television interview on Thursday. "We're now able to pursue large-scale M&A deals," he said.

The Federal Reserve's interest-rate cut overnight will have a positive effect on Mizuho's business in the US, Kihara said. "The momentum will continue probably, and that's good for us." He expects the Fed to reduce rates two or three more times.

In Japan, CEOs have changed their mindsets to improve returns for shareholders, particularly at large-cap companies, Kihara said. Now that trend is spreading to midcaps, and Mizuho has expanded its capabilities in the sector, he said.

Japan's biggest banks are forecasting another year of record profits as higher interest rates boost lending income and tariffs do little to derail business. Mizuho raised its annual profit forecast in November, its second upward revision for the fiscal year ending in March.

Kihara said new Prime Minister Sanae Takaichi is keen to grow the economy, making Japan "very, very interesting."

Takaichi recently unleashed the country's biggest burst of spending since pandemic restrictions eased, adding to concerns about the country's public debt. Japanese government bonds have tumbled this year, sending yields to the highest in decades.

But Kihara said he doesn't expect any huge shocks as long as the government maintains fiscal discipline. He said 10-year JGB yields may exceed 2% — a level they haven't breached in 19 years — but will remain relatively low.

Kihara anticipates the Bank of Japan will raise interest rates this month, in line with market expectations. And even if the BOJ hikes again next year, he doesn't see the yen appreciating much. Japan's currency is likely to trade around 145-150 per dollar, he said.

The yen was at 155.63 on Thursday morning in Tokyo.

Source: Bloomberg Europe

Canada recorded a trade surplus for the first time since January as exports rebounded sharply and imports declined.

New data from Statistics Canada shows the country's trade balance flipped to a narrow surplus of C$153 million in September from a deficit of C$6.4 billion in August.

Economists surveyed by Bloomberg expected the trade deficit to come in at C$4.5 billion.

Total exports jumped by 6.3% amid increases across product categories, though metal and non-metallic mineral products posted the largest increase, rising by 22.7%.

"Since the beginning of 2025, these exports have been showing an up-and-down trend. On one hand, products hit by high tariff rates, such as aluminum and steel products, saw strong declines, while on the other hand, exports of unwrought gold rose sharply," Statistics Canada said in its report.

On a monthly basis, exports of aluminum jumped 18.6% in September, but are still down significantly from a year earlier.

Meanwhile, imports were down 4.1%. Statistics Canada says two-thirds of that decline can be attributed to lower imports of metal and non-metallic mineral products as imports of unwrought gold declined significantly.

In volume terms, exports were up 4.1% in September, while import volumes fell 3.3%.

Canada continues to face steep US tariffs on steel, aluminum, autos and lumber as trade talks with the Trump administration remain halted. It's widely expected those talks will be folded into the US-Mexico-Canada Agreement review next year, leaving a cloud of uncertainty over the country's trade outlook.

Exports to the US in September increased 4.6% while imports fell 1.7% in the third consecutive decline. Taken together, Canada's trade surplus with the US widened to C$8.6 billion from C$6 billion, marking the largest surplus since February.

Exports to countries other than the US rose 11% in September, led by shipments of gold to Switzerland, oil to Germany and oil and aircraft to Singapore. Meanwhile, imports from countries other than the US fell 7.3%, helping to narrow Canada's trade deficit with non-US countries to C$8.5 billion, the lowest since October 2024.

After a steep decline in exports in the second quarter, total exports rose 2.4% between July and September, driven by higher exports of energy products and consumer goods. Imports fell by 2% in the third quarter, helping to narrow Canada's trade deficit with the world to C$10.1 billion, down from $18.6 billion in the second quarter.

Tuesday's report comes after Statistics Canada delayed the release of international trade data twice due to the US government shutdown.

Source: Bloomberg Europe