Crude oil market in 2025; attention to LNG and US CPI

Apart from the crude oil market, several analysts were paying attention to the "liquified natural gas (LNG) market." Tomomichi Akuta, Senior Economist at Mitsubishi UFJ Research and Consulting, said, "The LNG market is already on the rise. But if the market advances further, this might have an impact on the crude oil market."

In addition, Takayuki Nogami, Senior Economist of JOGMEC, mentioned that LNG prices would have a large impact on the crude oil market. According to Mr Nogami, if LNG prices rise, Asia and Europe are unwilling to consume LNG, but if the prices fall, consumption would increase in many areas. Mr Nogami said, "LNG prices in Northeast Asia would move within a range of around $7-16/mmBtu in 2025." At present, there are bullish factors such as the situation in Ukraine, Russia and the Middle East, tariff policy of President-elect Trump and uncertainty of Chinese economy. Alternative LNG demand to oil would likely emerge in 2025 as well.

Satoru Yoshida, commodity analyst with Rakuten Securities, gave attention to actual values of energy sector of the US CPI. According to Mr Yoshida, most players including central banks check CPI and see the difference from the previous month and they usually take into account only the values for the past one year.

Meanwhile, the actual values of energy sector of the US CPI almost track WTI crude oil prices and have been hovering high since the end of 2022. WTI prices doubled from 2015 and 2020 and the actual values of energy sector of the US CPI are around 1.6 times as high as 2015 and 2020. Inflation seems to be slowing down compared to the previous month. But in fact, this is because crude oil price declined from the unprecedented high prices immediately after the Ukraine war broke out in 2022 and have been moving within a range, according to Mr Yoshida. Also, inflation would truly disappear when WTI prices plunge to about $40/bbl at the level seen in 2015 and 2020. But this would unlikely occur in 2025.

Naohiro Niimura, co-chief of Market Risk Advisory, said, "I am interested in whether players can stop importing Russian gas as expected. In line with the DX movements, players are competing to obtain heat sources all over the world. Under such circumstances, we should see whether use of nuclear power generation would be reviewed in Japan." Yuki Takashima, Economist at Nomura Securities was paying attention to the progress of using renewable energy and electric vehicles (EV) under Trump administration.