2026 Outlook: Why Energy Markets Face Glut as Metals and Gold Shine

In its latest Commodities Outlook, for 2026, ING said it remains bearish towards energy markets, with the global oil market set to be in large surplus, following OPEC+ rapidly ramping up output as it shifts policy, while demand growth remains modest.

"There is plenty of uncertainty about Russian oil supply following US sanctions, but as we move through 2026, markets will get a clearer picture of the full impact," the ING report read.

For now, ING believes the impact will be limited in the medium to long term.

However, there is potential for greater volatility, given that OPEC's spare production capacity has shrunk as the group has increased output.

"While there are some short-term upside risks for the European gas market, it's set to become better supplied, despite the region's plans to phase out Russian gas and LNG. The start-up of LNG export capacity, particularly from the US, will leave global LNG markets and the European gas market increasingly more comfortable. However, the ramp-up of US LNG exports risks leaving the US gas market tighter," the report read.

Developments related to Russia-Ukraine peace talks will also be important to watch in 2026, with any progress towards ending the war likely to put further pressure on energy markets.

ING sees a surplus of more than 2 million barrel per day (b/d) in 2026.

Global supply is set to grow by 2.1 million barrel per day (b/d) next year, while demand looks to be more modest at around 800,000 barrel per day (b/d).

ING also noted that grain prices have likely bottomed, but it could see more downward pressure on soft commodities.

Coming to metals, most base metals, according to the ING report, are likely to remain well supported next year.

"Uncertainty over US refined copper tariffs will likely continue to see strong refined copper flows to the US, tightening up the ex-US market. And this coincides with a persistently tight copper concentrate market. For aluminium, the market is focused on China approaching its production cap, along with several producers elsewhere considering closures due to high power prices."

ING believes that the aluminium market will be tight in 2026.

For nickel, it expects little change amid persistent surpluses, keeping prices under pressure.

"We expect iron ore to trade lower with Chinese demand still a concern and supply growing, helped by the start of the 120mtpa Simandou mine," ING noted.

For gold, it expects gold prices to remain strong and reach yet new heights. With the Fed set to cut rates and the USD likely to remain under pressure, this should be constructive for investment demand, while central banks are likely to continue adding to their reserves.

While agri commodities have seen some downward pressure this year due to strong supply and trade tensions, ING believes the corn, wheat, and soybean markets are set to tighten next season, suggesting the potential for some upside in prices.

However, much will depend on US trade policy with China, while for soybeans, US biofuel policy is also important.

"The sugar market is set for a large surplus, driven by another strong crop from CS Brazil, while India is poised for a large recovery in output. This should keep sugar prices under pressure. The cocoa market is set for another surplus in 2025/26, suggesting prices are likely to continue trending lower from elevated levels. Finally, we also expect some moderation in the coffee market, with Brazil set to see a strong 2026/27 crop, but there are risks to this view," it noted.

- ANI