Buying ASX 200 energy shares? Here's the latest IEA oil forecast

What can ASX 200 energy shares like Woodside expect in the year ahead?

| More on:
Oil worker using a smartphone in front of an oil rig.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Buying S&P/ASX 200 Index (ASX: XJO) energy shares?

Then I don't have to tell you how much the oil price can impact the share prices of companies like Woodside Energy Group Ltd (ASX: WDS), Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT).

As markets are generally forward-looking, ASX 200 energy shares also tend to rise and fall based on the forecast outlook for global oil prices.

Now, Woodside, Santos, and Beach Energy also produce gas. While the gas price doesn't move in lockstep with the oil price, the two tend to trend in the same direction over the medium term.

With that said, here's the latest forecast from the International Energy Agency (IEA).

What's been happening with the oil price?

As a quick recap, Brent crude oil prices kicked off 2024, trading for US$76 per barrel. The oil price then marched higher through 5 April amid rising conflict in the Middle East, when Brent crude topped US$91 per barrel.

Over the past five weeks, the oil price has retraced, with Brent fetching US$83 per barrel at market close on Thursday.

The net impact has been mixed for ASX 200 energy shares, which have each had their own company specific issues to deal with as well.

Here's how they've been tracking year to date:

  • Santos shares are flat
  • Woodside shares are down 11.22%
  • Beach Energy shares are up 4.91%

What can ASX 200 energy shares expect from global oil demand in 2024?

As for what lies ahead, the IEA has scaled back its 2024 oil demand growth forecast by 140,000 barrels per day since last month's report. The agency now expects global oil demand to increase by an average of 1.1 million barrels per day over the full year.

While that may not be great news for investors in ASX 200 energy shares, it's worth noting that the IEA still forecasts global oil demand will come in at an all-time high of 103.2 million barrels per day in 2024.

On the supply side, the IEA projects global supplies will ramp up by 580,000 barrels per day to 102.7 million barrels per day, also a new record high.

Assuming that the Organization of Petroleum Exporting Countries and their allies (OPEC+) extend its voluntary cuts through to the end of the year, the agency expects OPEC+ production to drop by 840,000 barrels per day in 2024. But that will be more than compensated by an expected 1.4 million barrel per day increase from nations outside the cartel.

One of the wild cards that could see demand higher or lower than forecast remains the path of interest rates, particularly from the US Federal Reserve. Lower rates sooner than forecast, could fuel energy use among households and businesses worldwide.

"Recent macro data from the US has raised expectations that the Fed could start cutting rates soon, which will be providing some support to oil," said Warren Patterson (quoted by Bloomberg).

Looking at what could impact ASX 200 energy shares further down the road, the IEA said, "Our global outlook for 2025 is largely unchanged, with the pace of growth now marginally eclipsing 2024 at 1.2 million barrels per day."

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

Man holding Australian dollar notes, symbolising dividends.
Share Gainers

How a $9k investment in this ASX All Ords stock ballooned to $35,234 in just 3 years!

Shares in the ASX All Ords stock have rocketed even as it’s paid out market-beating dividends.

Read more »

A man sees some good news on his phone and gives a little cheer.
Energy Shares

Guess which ASX uranium stock is charging higher today

This stock is avoiding the market weakness on Friday. But why?

Read more »

A woman wearing a hard hat holds two sparking wires together as energy surges between them. representing the rising Li-S Energy share price today
Energy Shares

How much could a $10,000 investment in Woodside shares be worth in 12 months?

Here's what sort of returns one leading broker is expecting from the energy giant.

Read more »

uranium mining, uranium plant, uranium worker
Energy Shares

Will ASX uranium shares run higher on this 'historic' supply ban?

The United States President has signed fresh uranium policy into law.

Read more »

A little girl stands on a chair and reaches really, really high with her hand, in front of a yellow background.
Share Market News

Is the Woodside share price at a stretched valuation right now?

Some are still optimistic on the energy giant, despite softer oil prices.

Read more »

Worker inspecting oil and gas pipeline.
Energy Shares

ASX 200 energy shares slip as cracks appear in OPEC unity

Woodside and Santos shares are both underperforming the ASX 200 on Monday. But why?

Read more »

Happy man standing in front of an oil rig.
Energy Shares

Guess which ASX energy shares are buys and could deliver huge 12-month returns

Morgans sees scope for these energy producers to rise materially from current levels.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Energy Shares

The little known ASX uranium stock that could rise 35%

Here's why Bell Potter is tipping this uranium share as a speculative buy right now.

Read more »