Oil prices on track for another monthly loss ahead of OPEC meeting

A mixed morning in Europe sees the FTSE 100 lead the way, pushing higher as the doubts and uncertainty around the budget clear. A raft of key datapoints have seen weak inflation figures out of both Italy (-0.2%) and France (-0.1%), seemingly paving the way for a similarly weak eurozone CPI figure next week. However, the big news has come from an unexpected outage at the CME, with a malfunction in their cooling systems impacting trade across a number of key commodities, treasuries, and index futures. The outage came at the same moment as a bullish breakout in silver, with the precious metal having just pushed into a fresh record high. Thus, with thin liquidity, we have seen a morning of volatility with early precious metal gains ultimately reversing while the CME attempt to get their systems back up and running. The question for the metal bulls is whether we see prices surge higher once the issue is resolved.

Oil prices are on track for their longest run of monthly losses in more than two years, with traders weighing up the implications of the weekends OPEC+ meeting and efforts to end the war in Ukraine. This week saw a surprise 2.8 million barrel rise in US inventories, with imports increasing as the government seeks to rebuild the Strategic Petroleum Reserve. Meanwhile, the Chinese also issued their first 2026 oil import quotas, with the country expected to continue their recent policy of stockpiling crude while prices are low. However, despite this demand, the potential deal between Ukraine and Russia does provide the basis of caution for oil bulls, with a deal likely to bring higher supply and an end to Ukrainian attacks on Russian energy infrastructure. This weekend brings the OPEC+ group back together, with markets speculating over the potential for another production hike. However, it is worthwhile noting that many members have failed to meet their quotas already, signalling a lack of capacity to raise production further. As such, the ability to raise output likely comes down to how much additional market share Saudi Arabia seeks to reach before stabilising quota levels. As such, we are likely to soon reach the end of the expansion phase that has helped drive crude down to $60.

Trump used the Thanksgiving celebrations to take aim at immigrants in the US, with the President announcing plans to halt migration from developing countries, eliminate federal benefits for non-citizens, and deport individuals deemed security risks or incompatible with Western values. Significant parts of the proposals would likely face legal challenges, much like the travel bans enforced during his first term. Meanwhile, this could further exacerbate the struggles for US businesses that have recently found it difficult to find the right candidates to fill roles. Thus, should this come to fruition, it would likely cause additional stress on the jobs market as we have already seen with the deportation efforts.

Trump has also claimed that their tariff revenues could allow the country to scrap or slash income tax in the coming years. Notably, this move would essentially mean that all efforts to pay down the debt from tariff revenues are essentially halted. Meanwhile, it is notable that current revenues from Trumps tariffs are a fraction of the money received through income tax. This appears to be another example of the President promising huge public windfalls thanks to his tariffs, meaning that any Supreme Court decision to undermine his policies will be shaped as an attack on the American public.