As January drew to a close, ING updated its energy market outlook, predicting that global supplies of oil and natural gas will remain comfortable through at least mid-2024. This revised forecast highlights a significant shift from the energy scarcity concerns that dominated much of the past two years. ING’s analysis points to a combination of resilient supply levels and strategic production controls by major energy players as key factors stabilizing the market.
In Europe, natural gas inventories have remained robust throughout the winter. Storage facilities are on track to end the heating season with levels well above historical averages, alleviating fears of energy shortages that arose in the aftermath of geopolitical tensions and the Russian invasion of Ukraine. This strong inventory position has been bolstered by a mild winter, reduced industrial demand, and diversified import strategies that include liquefied natural gas (LNG) from the United States and Qatar.
Meanwhile, the global oil market also appears stable, contingent on the continued strategic output management by the Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+. ING analysts cautioned, however, that the market balance remains delicate. Without additional voluntary supply cuts from OPEC+ members, there is a growing risk that oil markets could tip into surplus during the second quarter of the year. Such an oversupply scenario would likely result in downward pressure on oil prices.
This updated projection marks a notable departure from earlier forecasts that warned of tightening global fuel availability. Instead, ING’s analysis suggests that both oil and gas markets may enjoy a period of relative stability, which could bring welcome relief to energy-dependent sectors and consumers worldwide. Lower mid-year energy costs are now a plausible scenario, especially if current trends in supply and demand hold steady.
However, ING emphasized that several variables must still be closely monitored. Chief among them are the policy decisions made by OPEC+ and the pace of economic growth in emerging Asian markets, where energy consumption is rapidly rising. Any significant shifts in these areas could quickly alter the current trajectory.
Overall, ING’s late-January update underscores a more optimistic short-term outlook for global energy markets. While vigilance remains necessary, particularly in tracking geopolitical developments and international policy decisions, the prospect of an ongoing energy surplus offers a degree of economic predictability not seen in recent years.
