The price of Brent crude oil paused its two-month decline and rose by 2.0% overnight, moving up from $69.56 per barrel to $70.93.
The rise was seen after reports indicated that US crude inventories went up by 1.4 million barrels for the previous week, which is less than the anticipated addition of 2 million barrels predicted by experts.
The rise in the oil price seems to provide some relief. S&P/ASX 200 Index  (ASX: XJO) energy shares today that have faced strain during the last twelve months due to declining energy costs.
Here’s how these major ASX 200 oil and gas shares are performing in the afternoon session on Thursday:
- Woodside Energy Group Ltd ( ASX: WDS ) shares have increased by 0.2%
- Santos Ltd ( ASX: STO The shares have risen by 0.2%.
- Beach Energy Ltd ( ASX: BPT The shares have risen by 0.2%.
However, as the oil price remains 13.5% lower than it was on January 15 at $82.03 per barrel for Brent crude, all three of the ASX 200 energy sector stocks continue to show losses in 2025.
If the analysts at Citi are correct, Beach Energy, Santos, and Woodside stocks might continue to encounter challenges in the coming months.
How might the fluctuating oil prices impact ASX 200 investors?
The US President, Donald Trump, seems determined to reduce energy costs, which according to Citi analysts might substantially decrease inflation in the largest economy globally.
Although reduced fuel expenses could bring positive outcomes for drivers and resource-heavy enterprises such as factories, aviation firms, and logistics corporations, shareholders of ASX 200 energy entities including Woodside and Santos might not view this development favourably.
Certainly, Citi is now predicting that Brent crude oil prices will drop to $60 per barrel by the close of 2025, marking over a 15% decrease from their present value.
And the broker noted that the oil price might drop as low as US$50 per barrel (thanks to The Australian Financial Review ).
"Given that White House comments imply they might aim for as low as $50 US per barrel of oil, we're also taking this ... downturn into account," according to Citi analyst Eric Lee.
Supplies will expand at a faster rate than demand.
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 front, the United States, being the global leader in production, is anticipated to continue boosting its output levels. This increase may coincide with additional supplies entering the market from South American countries and OPEC+ announcing plans to gradually reverse their production cut measures.
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.
As per Gunvor Group Chairman Torbjorn Tornqvist, who spoke at the CERAWeek yearly oil and gas symposium held in Houston (as cited by the AFR), he stated, “It’s evident that the sector is producing beyond necessity; we’re extracting more both within and outside of OPEC than what the increase in demand can justify.”
The post To what extent can the oil price decline? Below is Citi's prediction for 2025. appeared first on The Motley Fool Australia .
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Citigroup serves as an advertising partner for Motley Fool Money. Motley Fool contributor Bernd Struben The Motley Fool Australia does not hold any shares in the companies discussed. Additionally, Motley Fool Holdings Inc., which owns The Motley Fool Australia, also does not own positions in these mentioned stocks. Furthermore, The Motley Fool as an organization has no stake in any of the aforementioned stocks. disclosure policy This article includes solely general investment advice (covered under AFSL 400691). Authorized by Scott Phillips.
