1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 43
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
We remain cautious on the oil market’s medium-term outlook. While the market continues to be in a tug
of war between the weakening demand/supply balance and high volatility driven by geopolitical
headlines, investor sentiment is gradually shifting more bearish as inventory buildout has become
visible. We now forecast oil supply could exceed demand by 1.5-3.0 mmbbl/d in 2026, depending on
developments in the Russia/Ukraine war and Venezuela and on the response of Saudi Arabia to falling
oil prices. Risk is to the downside for the 2026 oil price outlook, in our opinion. Longer term, we think
non-OPEC supply growth will slow drastically by the turn of the decade which could lead to higher prices
as worldwide demand will likely continue to rise modestly well into next decade. However, the
demand/supply outlook could be a bit challenging in the near future as we think non-OPEC growth will
remain fairly robust. Within OPEC, we expect Iraq production will benefit from the recent wave of new
contracts signed by large IOCs. In addition, if there is a peaceful and orderly power transfer in Venezuela,
the country’s massive extra-heavy oil resource base could support significantly higher production in the
years to come.
Crude supply surplus to keep oil prices on the defensive
World crude petroleum and liquids
supply minus demand, million barrels
per day, 12mma
3
2
1
0
-1
-2
2001
2006
2011
2016
2021
2026
Source: International Energy Agency, Scotia Wealth Management.
Gold
For 2026, we expect heightened economic and geopolitical uncertainty, high global debt levels, and
strong official sector buying (diversification from the U.S. dollar) to support a continued above-average
premium to our fair value in the gold price. Our 2026 gold price forecast is $3,800/oz; the increase over
2025 reflects our expectation that economic conditions will become more uncertain, including an
eventual decline in real interest rates (including expectations for interest rate cuts). We expect bullion to
remain volatile given this backdrop. A higher premium to fair value and thus a higher gold price
environment could be further supported if investor sentiment were to switch from risk-on to risk-off
trades (with a potential decline in equity markets), if geopolitical tensions heighten and negatively affect
economies, if current economic uncertainty due to Trump’s trade wars persists, if the central banks
become more aggressive in their buying, or if there are further additions to Comex positions and net
exchange-traded fund (ETF) inflows (which have been less active than in previous cycles).
Strong official demand for gold
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