Forecast Update - May 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 - April 2025 Summary
In April 2025, global oil prices experienced a significant decline, with Brent crude falling approximately 18% to close the month at $63.12 per barrel, and WTI dropping nearly 19% to $58.21—the steepest monthly losses since November 2021. This downturn was driven by OPEC+'s decision to increase output by 411,000 barrels per day in June, contributing to a total addition of 960,000 bpd for April through June, which unwinds 44% of earlier production cuts.
🟧 Commodia - Forecast Update of Brent
📈 Comparison of Commodia Forecast vs. ICE Future Price
In May 2025, Commodia forecasts Brent crude oil at $68.57 per barrel, which is 4.8% higher than ICE's forward priceof $65.45. By August 2025, the gap widens significantly, with Commodia projecting $69.25 per barrel, 17.6% higherthan ICE's $58.88.
By November 2025, Commodia forecasts $70.38, which is 19.5% higher than ICE's $58.92. In May 2026, the gap grows further as Commodia expects $74.13, 23.2% higher than ICE's $60.19. Looking ahead to May 2027, Commodiaprojects a sharp increase to $79.92, which is 28.7% higher than ICE's forward price of $62.11.
🟥 Commodia - Forecast Update of WTI
📈 Comparison of Commodia Forecast vs. NYMEX Future Price
In May 2025, Commodia forecasts WTI crude oil at $62.88 per barrel, which is 12.0% higher than NYMEX's forward price of $56.15. By August 2025, the gap narrows slightly, with Commodia projecting $63.17 per barrel, 9.9% higherthan NYMEX's $57.48.
By November 2025, Commodia forecasts $63.92, which is 12.1% higher than NYMEX's $57.00. In May 2026, the difference widens again, as Commodia expects $66.23, 14.9% higher than NYMEX's $57.66. Looking further ahead to May 2027, Commodia projects a notable increase to $71.97, which is 21.6% higher than NYMEX's forward price of $59.15.
🗝 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 March is the decline of global economic conditions, which has put downward pressure on our oil price forecasts (2.70% decline in WTI and 0.17% 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 March 2025.
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