The Brent crude oil price took a break from its two-month downward trend to gain 2.0% overnight, climbing from US$69.56 per barrel to US$70.93.
That bump came amid news that US crude stockpiles increased by 1.4 million barrels last week, lower than the 2 million barrel increase analysts had pencilled in.
The bump in the oil price looks to be offering some reprieve to S&P/ASX 200 Index (ASX: XJO) energy stocks today, which have been under pressure over the past year amid sliding energy prices.
Here's how these big ASX 200 oil and gas stocks are tracking in afternoon trade on Thursday:
- Woodside Energy Group Ltd (ASX: WDS) shares are up 0.2%
- Santos Ltd (ASX: STO) shares are up 0.2%
- Beach Energy Ltd (ASX: BPT) shares are up 0.2%
But with the oil price still down 13.5% since 15 January, when Brent crude was fetching US$82.03 per barrel, all three ASX 200 energy stocks remain well in the red in 2025.
And if the analysts at Citi have it right, Beach Energy, Santos, and Woodside shares could continue to face headwinds in the months ahead.
What can ASX 200 investors expect from the oil price?
US President Donald Trump appears intent on lowering energy prices, which Citi said could materially lower inflation in the world's biggest economy.
While lower fuel costs would be good news for motorists and energy-intensive businesses like manufacturers, airlines, and transport companies, it won't be welcomed as much by investors in ASX 200 energy stocks like Woodside and Santos.
Indeed, Citi is now forecasting that Brent crude oil will slide to US$60 per barrel by the end of 2025, down more than 15% from current levels.
And the broker noted that the oil price could tumble all the way to US$50 per barrel (courtesy of The Australian Financial Review).
"With White House statements suggesting that even $US$50 oil could be a target, we also consider this … decline," Citi analyst Eric Lee said.
Supply growth to outpace demand growth
While energy demand is forecast to grow in 2025, many analysts expect supplies to grow significantly faster, which is likely to pressure the oil price.
On the supply side, the US, the world's top producer is expected to keep increasing its output, even as more oil comes onto the market from South America and as OPEC+ said it will begin unwinding its production cuts.
With Trump attempting to negotiate an end to Russia's war in Ukraine, the prospect of more Russian oil hitting global markets further adds to supply glut fears.
According to Gunvor Group chairman Torbjorn Tornqvist, speaking at the CERAWeek annual oil and gas conference in Houston (quoted by the AFR), "The industry is over-drilling now, that is clear. We are drilling more inside and outside OPEC than demand growth warrants."
