Forecast Update - January 2025
Update of Brent and WTI forecasts.
Dear subscribers,
At the beginning of each month, we will be sending you an email like this with an updated forecast of energy prices. Commodia brings together top academic economists who specialize in the analysis of global energy markets. The team has more than 20 years of experience from leading universities across the United States, Canada, Europe, and the Asia Pacific. Our forecasts are based on state-of-the-art forecasting techniques to predict energy commodity prices.
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🛢️Oil Market - December 2024 Summary
In December 2024, oil prices remained relatively stable, with Brent crude oil averaging around $73.86 per barrel, a slight decrease from November's average of $74.35 and reflecting a 4.86% decline over the past year. The market was influenced by several key factors. China's manufacturing sector continued to expand for the third consecutive month, though at a slower pace, providing support to oil prices given China's significant role as a major consumer.
On the supply side, the International Energy Agency projected that global oil production would surpass demand in 2025, creating a cautious market sentiment. Geopolitical tensions, particularly in the Middle East and Ukraine, introduced volatility due to concerns over potential supply disruptions. Meanwhile, anticipation of pro-growth policies from the incoming U.S. administration, including the possibility of increased domestic oil production, added to the market's complexity.
🟧 Commodia - Forecast Update of Brent
📈 Comparison of Commodia Forecast vs. ICE Future Price
In January 2025, Commodia forecasts Brent crude oil at $73.90 per barrel, which is 0.3% lower than ICE's forward price of $74.10 per barrel. By April 2025, Commodia's forecast rises to $74.95 per barrel, approximately 1.6% lowerthan ICE's forward price of $76.17 per barrel.
By July 2025, Commodia anticipates a price of $75.95 per barrel, which is 1.4% higher than ICE's forward price of $74.87 per barrel. In January 2027, Commodia forecasts $80.25 per barrel, which is 13.7% higher than ICE's forward price of $70.59 per barrel.
🟥 Commodia - Forecast Update of WTI
📈 Comparison of Commodia Forecast vs. NYMEX Future Price
In January 2025, Commodia forecasts WTI crude oil at $70.43 per barrel, which is 2.2% lower than NYMEX's forward price of $72.05 per barrel. By April 2025, Commodia's forecast rises to $72.38 per barrel, approximately 0.6% lowerthan NYMEX's forward price of $72.80 per barrel.
By July 2025, Commodia projects a price of $72.69 per barrel, which is 1.5% higher than NYMEX's forward price of $71.61 per barrel. In January 2027, Commodia forecasts $76.85 per barrel, which is 15.1% higher than NYMEX's forward price of $66.75 per barrel.
🗝 Key drivers of Commodia’s crude oil forecast from the previous month
The main variables influencing Commodia's crude oil forecast (Brent and WTI) are global fuel consumption, global economic conditions, and OECD petroleum inventories. The main change in our forecast from November is the decline in global fuel consumption, which has put downward pressure on our oil price forecasts (1.79% decrease in WTI and 1.47% in Brent).
The main determinants of Global Economic Conditions are shown in the figure below:
Chart of Main Drivers of Global Economic Conditions from Christiane Baumeister & Dimitris Korobilis & Thomas K. Lee, 2022. "Energy Markets and Global Economic Conditions" The Review of Economics and Statistics, 104(4), 828-844.
The main determinants of Global Economic Conditions are shown in the figure above for the period January 2020 to December 2024.
For more details about the Global Economic Conditions index visit: https://sites.google.com/site/cjsbaumeister/research
References
International Energy Agency (IEA). (2024). Oil Market Report - May 2024.
U.S. Energy Information Administration (EIA). (2024). Short-Term Energy Outlook - May 2024.
BNN Bloomberg. (2024). Oil Markets Look ‘Reasonably Well Supplied’ in 2024.
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Commodia Team