KeyBanc Raises 2024-2025 WTI Oil Forecasts, Cuts Natural Gas Price Outlook

SEATTLE (Oil Monster): On Monday, KeyBanc Capital Markets adjusted its commodity price outlook, raising its forecast for West Texas Intermediate (WTI) crude oil for the years 2024 and 2025, while simultaneously lowering its expectations for natural gas prices. The adjustment reflects a nuanced view of the energy market, taking into account geopolitical risks, production levels, and demand trends.

The firm now anticipates that WTI oil will reach $78 per barrel in 2024, a 7% increase from its previous forecast. For 2025, the projection was raised by 6% to $74 per barrel. This upward revision is attributed to persistent geopolitical tensions and a strong global economic sentiment, which are expected to support demand. KeyBanc maintains that oil prices will hover in the $70-$80 range but has shifted its predictions to the upper end of this spectrum due to the current geopolitical climate.

In contrast to its bullish stance on oil, KeyBanc has reduced its natural gas price forecast. The 2024 Henry Hub price estimate was cut by 17% to $2.50 per million British thermal units (mcf), and the 2025 outlook was lowered by 7% to $3.25/mcf. The revision is based on strong production, a mild winter season, and improvements in natural gas infrastructure that have eased bottlenecks.

Despite recognizing the long-term positive trends in natural gas demand, driven by power generation and liquefied natural gas (LNG) exports, KeyBanc expressed skepticism regarding the market's current valuation of gas-focused exploration and production companies. The firm anticipates that challenges in the natural gas market will persist through 2024 and 2025, and expects that some LNG export projects may face delays into 2025.

KeyBanc also highlighted a $3 per barrel premium for Brent crude oil over WTI in future periods, maintaining its previous view on this spread. The adjustments in commodity price forecasts by KeyBanc reflect its analysis of supply and demand dynamics, as well as the firm's expectations for the energy sector in the coming years.

Courtesy:  www.investing.com