Natural Gas and Oil Forecast | Oversupply and Recession Fears Pressure Energy Prices

What to Know

• Global oil prices have dropped to multi-month lows as supply growth outpaces demand, creating bearish pressure across energy markets.
• The International Energy Agency (IEA) expects a potential 4 million barrels per day oil surplus in 2026, signaling an extended period of oversupply.
• Natural gas prices have stabilized near $3.00 after a sharp decline, with deeply oversold RSI levels suggesting a short-term rebound may be possible.
• Traders are watching upcoming inventory data for clues about demand recovery amid recession fears and geopolitical tensions.
• Both oil and natural gas markets remain technically bearish, but oversold indicators could lead to temporary price corrections.

Market Overview

Global energy markets are struggling to regain balance as concerns over a global economic slowdown and rising supply weigh heavily on investor sentiment. WTI crude oil prices dropped near $58 per barrel, marking their lowest level since May. The weakness is largely attributed to growing production among both OPEC+ members and non-OPEC countries, which has outpaced demand growth and fueled expectations of continued oversupply.

According to the International Energy Agency (IEA), global oil markets could face a surplus of up to 4 million barrels per day next year, potentially persisting through 2026. The agency warns that without a major policy or production adjustment, the imbalance between supply and demand could continue to pressure prices. Weak industrial activity in China and Europe, coupled with slower economic growth in the U.S., has further limited consumption levels, adding to bearish sentiment.

Investors remain cautious as they await updated inventory and production data from the U.S. Energy Information Administration (EIA). The results will help determine whether any near-term demand recovery is forming or if the sector will continue to experience downward pressure through the final months of 2025.

Natural Gas Market Analysis

Natural gas (NG) futures are trading near $3.00, recovering slightly after a steep fall from $3.45. Prices have managed to stabilize just above a key horizontal support area at $2.98–$2.90, a zone that has repeatedly acted as a reversal point in previous trading sessions.

Despite the brief stabilization, overall momentum remains weak. The 50-day exponential moving average (EMA) at $3.20 and the 200-day EMA at $3.28 both sit above current price levels, signaling that sellers still dominate short-term action. The Relative Strength Index (RSI), however, is currently hovering around 26, indicating that the market is in deeply oversold territory and a short-term rebound may be due.

If natural gas manages to close above the $3.10 resistance level, a corrective recovery toward $3.18–$3.30 could unfold. However, failure to maintain support at $2.90 could trigger further declines toward $2.82, extending the bearish outlook.

WTI Oil Price Forecast

WTI crude oil is currently consolidating near $58.79 after hitting its lowest point in several months. Price action remains trapped below both the 50-day EMA ($60.56) and the 200-day EMA ($62.45), confirming that the short-term trend remains bearish. A descending trendline from the $64.80 high continues to limit any recovery attempts.

Technical support is found near $58.20 and $57.40, while resistance lies between $60.00 and $61.10. The RSI, now at 38, shows mild oversold conditions, which could slow the pace of further declines.

If WTI manages to close above $60.50, a short-term corrective bounce could push prices toward $61.90. Conversely, a break below $58.20 may extend losses toward the $56.80 level. Traders are watching closely to see if energy policy announcements or OPEC+ output decisions could help stabilize prices in the weeks ahead.

Brent Oil Price Forecast

Brent crude oil is hovering around $62.44, showing a slight rebound after hitting its lowest level since May at $62.05. Despite this modest recovery, the overall trend remains bearish. Prices continue to trade below both the 50-day EMA ($64.31) and the 200-day EMA ($66.14), suggesting that downside risks remain in place.

A descending trendline from the $70.05 high continues to suppress upward momentum. The RSI indicator, currently at 36, reflects oversold conditions that could lead to a short-term technical correction. Immediate resistance is seen at $64.20, followed by $65.50, where sellers are likely to return.

On the downside, a break below $62.00 would expose further targets at $60.90 and $60.10. A daily close above $64.20 could hint at short-term stabilization, but broader market direction will likely depend on upcoming inventory data and global demand recovery signals.

Broader Energy Market Outlook

The combination of recession fears, global trade uncertainty, and policy indecision has cast a shadow over the energy sector. Despite ongoing geopolitical tensions, including supply disruptions and regional conflicts, the market’s focus remains on the imbalance between production and consumption.

Analysts warn that without stronger demand growth or coordinated output cuts, both oil and natural gas prices could remain under pressure well into 2026. However, oversold technical indicators across both commodities hint at the possibility of temporary price rebounds in the near term.

Investors are advised to monitor developments in global energy policy, OPEC+ meetings, and U.S. production data for clues on whether the market can find equilibrium before year-end.

Q&A

Why are oil prices dropping in 2025?

Oil prices are falling due to a combination of oversupply and slowing global demand. The IEA projects a large production surplus through 2026, while weak industrial activity in major economies continues to weigh on consumption.

Could natural gas prices rebound soon?

Natural gas prices may experience a short-term rebound as the RSI indicates oversold conditions. However, the broader trend remains bearish unless the price breaks above $3.10 and maintains momentum.

What does the IEA forecast mean for energy investors?

The IEA’s forecast of a 4M bpd surplus suggests that supply will outpace demand for several years, which could keep prices subdued. Investors may need to prepare for extended periods of volatility and range-bound trading.

How do recession fears affect oil and gas prices?

Recession concerns typically lower industrial output and consumer energy demand, reducing global consumption levels and pushing prices lower across the energy sector.

When could oil prices recover?

A recovery may occur if global demand improves, geopolitical tensions restrict supply, or OPEC+ enacts coordinated production cuts. Until then, technical indicators suggest limited upside potential.

For more daily forecasts and expert analysis on natural gas and oil markets, including price action, trend analysis, and key supply-demand factors, , visit our Forecasts section and stay ahead of market trends.