Macroeconomic factors, strong supply, and weather disruptions are expected to weigh on energy prices in 2025, analysts at BMI said in a BMI report sent to Rigzone by the Fitch Group on Monday.
“We have lowered our 2025 Brent crude forecast to average $76 per barrel, which would mark a five percent decline from 2024’s annual average of $80 per barrel,” the analysts said in the report.
“Strong supply additions from non-OPEC producers and the likely return of OPEC+ production during the year will push markets further into oversupply without higher demand growth than we currently forecast for 2025,” the analysts warned.
“The prospects of near-term resolutions to conflicts in the Middle East and Ukraine are likely to weigh on sentiment and, should they be concluded peacefully, the associated risk premia will … also put downward pressure on energy prices,” they continued.
In the report, the BMI analysts noted that, “due to the softer demand growth following the post-Covid rebound seen in 2022 and 2023”, they have seen prices “track steadily lower across 2024”.
They said the prospect of a near-term rise in prices is limited given the increases in supply and lack of substantial new demand expected.
Looking at U.S. natural gas, the analysts stated in the report that these prices are expected to see growth as LNG exports track higher, absorbing much of the expected growth in production.
“We forecast the front month Henry Hub gas benchmark to post growth of 42 percent in 2025, rising to $3.4 per million British thermal units (MMBtu),” they said.
“Despite gas in storage remaining highly elevated and below trend growth in gas consumption of 1.4 percent, we expect global demand for LNG to support higher prices,” they added.
“The developing La Niña conditions … [are] expected to fuel a colder than normal Northern Hemisphere winter, which should support natural gas prices both in the U.S. and abroad,” they continued.
Saxo Bank: 2025 Outlook Remains Unsupportive
In a note sent to Rigzone on November 29, Ole S. Hansen, Saxo Bank’s Head of Commodity Strategy, warned that the 2025 outlook “remains unsupportive for crude prices, with lacklustre growth not only in China but also in Europe, where economic data continues to weaken”.
“The OPEC+ group meets on 5 December to discuss whether to proceed with reviving supplies,” Hansen highlighted in the note, adding that, “following two postponements, the group has to consider the risk of further price weakness amid the release of currently unwanted barrels, not least because expectations for robust production from non-OPEC+ producers next year could lead to a crude surplus”.
Hansen went on to state that some upside risks remain, “including a potential Trump administration adding fresh sanctions on Iran and Venezuela, as well as geopolitical risks intensified by the Russia – Ukraine war and the Middle East conflict”.
In the note, Hansen said a proposal by Treasury Secretary nominee Scott Bessent to increase U.S. production by three million barrels of oil equivalent through 2028 will most likely be driven by increased production of natural gas and natural gas liquids.
“With WTI currently trading below $70, the incentive for further production increases remains constrained,” he said.
“As a result, we view natural gas as a more significant opportunity, with strong global demand making inexpensive U.S. natural gas highly attractive worldwide,” he added.
Standard Chartered, J.P. Morgan, EIA Forecasts
A report sent to Rigzone by Standard Chartered Bank Commodities Research Head Paul Horsnell on November 26 showed that the company is forecasting that the ICE Brent nearby future crude oil price will average $92 per barrel in 2025 and that the NYMEX WTI nearby future crude oil price will come in at $89 per barrel next year.
The report outlined that Standard Chartered sees the NYMEX basis Henry Hub U.S. natural gas price averaging $3.25 per MMBtu in 2025.
A research note sent to Rigzone by the JPM Commodities Research team on November 29 showed that J.P. Morgan expects the Brent Crude price to average $73 per barrel next year and the WTI Crude price to average $69 per barrel in 2025.
That note highlighted that J.P. Morgan sees the U.S. Natural Gas Henry Hub price averaging $3.50 per MMBtu next year.
In its latest short term energy outlook (STEO), which was released last month, the U.S. Energy Information Administration (EIA) projected that the Brent and WTI spot prices will average $76.06 per barrel and 71.60 per barrel, respectively, in 2025.
In that STEO, the EIA forecast that the Henry Hub spot price will average $2.90 per MMBtu in 2025.
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