Goldman Sachs Commodities Outlook: Oversupply Drives Oil and Gas Prices, Oil Prices Expected to Bottom Out in Mid-2026

Goldman Sachs stated that 2026 will be the last year of oil supply volatility, while the LNG supply surge will continue until 2032. The two major supply waves will significantly suppress global oil and gas prices. On December 19th, according to Wind Trading Desk, Goldman Sachs issued a clear signal in its latest 2025-2026 Commodity Outlook Report: micro-level "supply waves" will dominate energy price trends in the coming years. The bank forecasts that 2026 will see "the last large supply wave," resulting in an average daily surplus of 2 million barrels in the market. The Brent crude oil price is expected to average $56 per barrel in 2026 and hit its lowest point midyear. Analysts say that unless there is a large-scale supply disruption or substantial OPEC+ production cuts, the lowering of oil prices in 2026 will be an inevitable choice for market rebalancing. (Brent crude oil daily chart) At the same time, Goldman Sachs predicts the natural gas market will face an unprecedented, ultra-long cycle of supply surplus. Global LNG supply will surge by over 50% from 2025 to 2030. European natural gas prices (TTF) will face long-term downward pressure, and are expected to fall by nearly 35% by mid-2027. Oil: The Last "Supply Wave" and the 2026 Bottom According to the report, the team led by Goldman Sachs analyst Daan Struyven pointed out that starting in 2025, micro fundamentals—the massive supply wave—will be the main force suppressing oil prices. Unlike the long-term surplus in natural gas, the surplus in oil supply will be relatively short-lived, mostly concentrated in 2025-2026. The bank predicts that, due to long-cycle projects (mostly those with FIDs made before the pandemic) coming online, combined with OPEC’s strategic decision to lift production cuts, the global crude oil market in 2026 will face a daily surplus of 2 million barrels. This supply shock is expected to end in 2026, making it the "last major supply wave." As a result, Goldman Sachs expects the average oil price in 2026 to fall further: Brent: an average of $56 per barrel (well below the current forward market’s $59); WTI: an average of $52 per barrel (below the current forward market’s $56), about 8-10% lower than current futures prices. According to the report, in Goldman Sachs’ baseline scenario, oil prices will bottom out around mid-2026. By then, the market will begin to look towards rebalancing mechanisms, including low oil prices squeezing out non-OPEC supplies (excluding Russia) and further reductions in Russian supply. After hitting bottom mid-next year, Goldman Sachs expects oil prices to begin recovering in Q4 2026, as the market starts pricing in supply shortages in the second half of 2027 and the focus shifts to incentivizing long-cycle production. The report points out that, to meet demand growth in the 2030s and 2040s and offset the natural decline of old oilfields, oil prices need to recover to stimulate investment. Goldman Sachs forecasts that by the end of 2028, Brent/WTI prices will gradually recover to $80/$76. Notably, Goldman Sachs believes that changes in Russian production are a key risk factor in oil price forecasts. In a scenario with a Russia-Ukraine peace agreement, gradual restoration of Russian output could push the average Brent price in 2026 down to $51 per barrel. In contrast, if there are increasing attacks on Russian oil infrastructure or tougher sanctions, oil prices could exceed baseline forecasts. Natural Gas: Unprecedented Global Supply Surplus Goldman Sachs believes that, unlike the relatively short-lived supply shock in the oil market, the natural gas market is at the beginning of a massive seven-year supply wave (2025-2032). According to the report, FIDs made in recent years will translate into new capacity over the next few years, especially in the US and Qatar. Goldman Sachs expects global LNG export capacity to surge by over 50% from 2025 to 2030. This growth will greatly outpace demand increases, leading to significant downward pressure on global gas prices. Goldman Sachs says that the US, as the major force in LNG supply growth, will see export demand tightening its domestic natural gas market, pushing US natural gas prices up to $4.60 and $3.80/MMBtu in 2026-2027 to incentivize sufficient output growth. Meanwhile, large inflows of LNG will collapse European gas prices. Goldman Sachs expects European natural gas prices (TTF) to drop by nearly 35% by mid-2027. Additionally, Goldman Sachs depicted an extreme but possible scenario: with global LNG supply growth consistently exceeding demand, by 2028/2029, Northwest Europe’s gas storage facilities could face "congestion." To prevent inventory overflow, TTF prices would need to drop to extremely low levels, making US LNG exports unprofitable (i.e., below US variable export costs). This would force the US to cancel export cargoes, leading to a collapse in US domestic gas prices. Analysts at the bank expect this dynamic will eventually push TTF prices down to 12 euros/MWh (about $4.10/MMBtu) in 2028-2029, while US natural gas prices (Henry Hub) could fall to $2.70/MMBtu—both far below current futures prices. ~~~~~~~~~~~~~~~~~~~~~~~~ The above content is from Wind Trading Desk. For more detailed analysis, including real-time insights and frontline research, please join [Wind Trading Desk • Annual Membership]. Risk Warning and Disclaimer The market carries risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account individual users' specific investment goals, financial situations, or needs. 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