Energy Markets Face Tug-of-War Between Demand and Supply
Maxco Futures — The U.S. Energy Information Administration (EIA) has revised upward its forecast for the average price of West Texas Intermediate (WTI) crude oil in 2025 to US$65 per barrel, up from the previous estimate of US$64.16, according to the October edition of its Short-Term Energy Outlook. For 2026, the agency also raised its projection to US$48.50 per barrel from US$47.77.
This upward revision comes amid signs of sustained fuel demand in the United States and tightening supply from key producers, despite global economic pressures from inflation and high interest rates. The EIA noted that the average WTI price in Q3 2025 has reached US$65.79 per barrel, signaling stronger price stability than previously expected.
For 2026, the EIA projects oil prices to move in a moderate range, with quarterly forecasts of US$47.97, US$48.33, US$48.68, and US$49.00 per barrel, respectively.
Divergent Analyst Forecasts
Unlike the EIA’s outlook, several major financial institutions offer varying perspectives on oil prices:
- J.P. Morgan projects an average WTI price of US$62 per barrel for 2025, falling to US$53 in 2026, reflecting a more cautious view of global demand.
- Standard Chartered expects the opposite trend — WTI to average US$58 in 2025 before jumping to US$75 in 2026, assuming prices approach US$80 per barrel in Q4 2026.
- Morningstar forecasts US$65 for 2025 and US$60 for 2026 in a base-case scenario, while leaving room for a decline to US$45 under a pessimistic scenario.
Global Uncertainty Continues to Shadow Energy Outlook
The EIA’s upward revision confirms that the oil market fundamentals remain relatively healthy, though several risks persist. Geopolitical tensions in the Middle East, OPEC+ production policies, and China’s economic growth prospects are key factors that could influence prices in the coming quarters.
Meanwhile, rising U.S. shale oil production and expectations of a global economic slowdown may limit further price gains in 2026.
Implications for Markets and Investors
The revision suggests that the U.S. energy sector is likely to maintain positive momentum through 2025, particularly for exploration and production companies that are sensitive to oil prices. However, the medium-term outlook remains cautious as prices are expected to decline in 2026 due to potential easing of global supply.
With varying views from different institutions, the global oil market is now in a high-uncertainty phase, where the balance between demand growth and production policies will determine price direction over the next two years.
Ade Yunus, ST, WPA
Global Market Strategies