Rhythmic Reasoning_Full Report_Final_EN - Flipbook - Page 14
RHYTHMIC REASONING | TEMPO, TIMING AND TUNING
CO M M O D I T I E S
Paul Cheng
Tanya Jakusconek
Orest Wowkodaw
Managing Director, Equity
Research
Gold & Precious Minerals
Managing Director, Equity
Research
Metals & Mining
2024
2025f
2026f
WTI (US$/bbl)
$76.00
$65.00
$60.00
Brent (US$/bbl)
$81.00
$69.00
$65.00
WCS - WTI discount (US$/bbl)
-$15.00
-$11.00
-$12.00
Nymex nat. gas (US$/mmBtu)
$2.27
$4.03
$5.00
Copper (US$/lb)
$4.15
$4.30
$4.20
Iron ore (US$/t)
$110.00
$95.00
$90.00
Gold (US$/oz)
$2,386.00
$3,250
$3,400
Silver(US$/oz)
$28.21
$34.47
$33.00
Source: Bloomberg L.P., Scotia GBM. Forecasts are as at September 11, 2025.
KEY CONCLUSIONS
•
•
•
Oil fundamentals remain weak; however, geopolitics present
a wildcard.
Global economic and geopolitical dynamics and central bank
buying continues to drive a gold price well above our fair
value.
In copper, we are cautious about near term demand but see
strong pricing support from relatively low inventories and the
impact of elevated supply side under-performance.
OIL OUTLOOK
The global oil market remains in a prolonged tug of war between
bearish fundamentals and the constant flow of geopolitical
headlines that has kept oil prices resilient. Fundamentals remain
weak, and we continue to expect global oil supply will exceed
demand by ~2 mmbbl/d (million barrels of oil per day) through
2026 if Russian oil production remains relatively stable.
While the secondary tariffs on India alone are unlikely to cause a
serious long-term supply shortfall, the situation could rapidly swing
should the U.S. Administration also apply the same policy to other
major importers of Russian oil such as Turkey and China. That said,
so far, there is no evidence to suggest India has backed away from
its purchasing of Russia oil.
In our base case, we continue to forecast supply will likely exceed
demand by a fairly wide margin, even taking into consideration
potentially lower Russia oil production and export volumes, and
thus we still believe prices will average lower in 2026 versus 2025,
although they may not fall as low as our current forecast of $60/
$55 Brent/WTI averages.
We also reiterate our view that Saudi Arabia’s actions YTD have
shown a clear shift in policy, from previously maximizing near-term
revenue to market share management with negative implications
for the oil market’s near- to medium-term outlook, in our opinion.
With OPEC+ having already fully reversed the 2.2 mmbbl/d
voluntary production cut, the market is now watching to see how
aggressively Riyadh pushes for the reversal of the 1.6 mmbbl/d
April 2023 production cuts.
Fig. 1: Consensus forecasts for Brent oil
80
75
Brent ($/bbl)
Managing Director, Equity
Research
Alternative Fuels, E&P,
Independent Refiners, Major
Integrated Oils
70
65
60
55
4Q25f
1Q26f
Scotiabank GBM
However, the latest geopolitical developments associated
with Russia–Ukraine are a significant wildcard. The Trump
Administration’s decision to impose secondary tariffs on India for
Russian oil imports and Ukraine’s escalation of attacks against
Russian energy infrastructure in theory could flip the oil market
from oversupply to a shortfall. According to IEA, Russia exported
4.67 mmbbl/d of crude oil and 2.62 mmbbl/d of refined products
in July, or a total of ~7.3 mmbbl/d.
2025f
2026f
Strip
2027f
2028f
2029f
Consensus
Source: Bloomberg Finance LP, Scotiabank GBM
Longer term, we expect non-OPEC growth to remain robust
through 2030. Crude oil supply growth from the U.S., Argentina,
Brazil, Canada, Guyana, Kazakhstan, and Norway could exceed
1.2-1.3 mmbbl/d and 500-600 mbbl/d of NGLs for 2025 while
adding ~700 mbbl/d of additional oil supplies next year. We
reiterate our view that U.S. shale oil production could peak around
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