Crédit Mutuel Asset Management is an asset management company within Groupe La Française, the holding company for the asset management division of Crédit Mutuel Alliance Fédérale.
Energy prices are currently low, whether for a barrel of oil or natural gas. Regarding oil, this is justified by a market currently experiencing an oversupply; an excess that, according to the latest forecasts from OPEC[1], the EIA[2], and the IEA[3], should remain true in 2026. For natural gas, the logic is similar, and for both markets, the main reason is the same: U.S. production has been stronger than expected throughout 2025. We should also not forget the quota increases granted throughout the year by OPEC+[4], which also contributed to higher-than-expected oil production earlier in the year. Added to this are recent advances in the process of “ending hostilities” between Russia and Ukraine, increasing the likelihood that Russian commodities will once again become “purchasable” by all countries.
As a result, the consensus today is quite negative on energy prices, which has several consequences. First, it supports the economic outlook for all net-importing countries, meaning almost all developed countries and all Eurozone countries. It also supports the ongoing disinflationary trend, both through direct (for example, energy represents 10% of Eurozone inflation) and indirect effects. Finally, it also has significant effects on the earnings trajectory of many companies, with positive impacts for sectors like transportation or chemicals, but obviously negative impacts for the oil and gas industry.
However, this consensus could be challenged for several reasons:
- First, we are approaching levels that could severely impact the profitability of some U.S. producers. According to the latest estimates from the Dallas Federal Reserve, the price at which production is no longer profitable is around 61 dollar for large companies, and the WTI (West Texas Intermediate; the U.S. benchmark price) is trading below 56 dollar as of December 16.
- The war between Russia and Ukraine could drag on. This would not fundamentally change the current dynamic but could push prices up by 5–10%. (Source: Bloomberg)
- Investor positioning is very pessimistic today. CFTC (Commodity Futures Trading Commission) data shows extremely low speculative positions at present.
- Global economic improvement, a weak dollar, record U.S. deficits, the German stimulus plan and a Federal Reserve cutting rates, etc.; generally speaking, this is an environment that is positive for energy demand dynamics and has historically been associated with phases of energy price appreciation.
- The continued rise in energy demand from data centers is expected to persist. This is probably the most significant long-term risk, and it will probably not affect all energy sources equally. The EIA estimates that electricity demand from data centers should double within two years to reach 835 TWh, which is equivalent to Japan’s electricity consumption. While renewable energy in Europe will likely suffice to meet this increased demand, it will probably be more challenging in the U.S. This should tend to push natural gas prices upward, especially if capacity constraints in production emerge.
In conclusion, while the situation today seems very consensual regarding maintaining low oil and natural gas prices, a sudden increase in the price of a barrel of oil would undermine many current certainties: disinflation, Fed rate cuts, sustained consumption, etc. This would likely result in increased macroeconomic instability and greater volatility in financial markets.
Completed on 12/17/2025. This commentary is provided for informational purposes only. References to certain instruments or sectors are for illustrative purposes only and are not intended to promote direct investment in these instruments or sectors. The opinions expressed by Crédit Mutuel Asset Management are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Published by La Française Finance Services, headquartered at 128 boulevard Raspail, 75006 Paris, France, regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. Crédit Mutuel Asset Management: 128 boulevard Raspail, 75006 Paris, is a management company authorized by the Autorité des marchés financiers under no. GP 97 138 and registered with ORIAS (www.orias.fr) under no. 25003045 since 04/11/2025. Société Anonyme with capital of €3,871,680, RCS Paris no. 388 555 021, Crédit Mutuel Asset Management is a subsidiary of Groupe La Française, the asset management holding of Crédit Mutuel Alliance Fédérale.
[1] Organization of petroleum Exporting Countries
[2] Energy Information Administration
[3] International Energy Agency
[4] OPEC members and other oil-producing countries
