S&P/ASX 200 Index (ASX: XJO) energy shares are less than four full trading days from turning the page on a year of significant underperformance.
Although the ASX 200 has been retreating these past two weeks, the benchmark Aussie index remains up 5.8% in 2024.
Despite outpacing the benchmark today, here's how these ASX 200 energy shares have performed year to date:
- Woodside Energy Group Ltd (ASX: WDS) shares are down 26.2%
- Santos Ltd (ASX: STO) shares are down 16.9%
- Beach Energy Ltd (ASX: BPT) shares are down 18.0%
- Karoon Energy Ltd (ASX: KAR) shares are down 38.9%
While each company has faced its own headwinds and tailwinds over the year, a common factor impacting them all has been tepid global oil prices.
Brent crude oil is currently trading for US$72.59. That's down from US$75.89 per barrel on 2 January. And down from highs of US$91.17 per barrel on 5 April.
So, with an eye on 2025, what can investors expect now?
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What's ahead for ASX 200 energy shares in 2025?
As mentioned, each of these ASX 200 energy shares has its own unique strengths and weaknesses. The companies are exploring and developing new oil and gas projects, with some of these expected to come online in 2025. How that all unfolds could have a material impact on their performance in the year ahead.
However, all of their revenue streams depend on the price they receive for the oil and gas they pump from the earth.
On that front, the Office of the Chief Economist's forecasts, contained in the government's December Resources and Energy Quarterly Report, is unlikely to spur investor enthusiasm in these ASX 200 energy shares.
On the positive front for the energy companies, the report noted that "Gas markets have stabilised over the past few quarters, but 14 consecutive months of record global average temperatures have pushed up Asian LNG demand, increasing prices."
Looking ahead, however, the report stated:
Australia's LNG export revenues are forecast to decline from $69 billion in 2023–24 to $60 billion by 2025–26. The fall in export earnings is expected to be largely driven by lower LNG prices, though depletion of some gas reserves could affect volumes.
LNG prices remain relatively high, but new supply from the US and Qatar is forecast to bring prices down to around US$10/MMbtu by 2026.
And ASX 200 energy shares are unlikely to get a boost from a recovery in the oil price.
"Crude oil prices are falling as strong expected supply and weak demand puts downward pressure on prices. Export earnings are expected to fall as prices and output fall," the report noted.
According to the report:
The Brent crude oil price is forecast to fall from an average US$81 a barrel in 2024 to US$69 a barrel in 2026. The fall is expected to be driven by weak world oil demand and gains in ex-OPEC production.
Australia's crude and condensate export earnings are forecast to fall from AU$13 billion in 2023–24 to AU$8.8 billion by 2025–26, as prices and output fall.
