As has been a recurring story in the past few years, a lot has changed in the energy industry over the last few months. War, inflation and shifting energy security policy are rapidly changing the dynamics of industry. We have moved into a period of an overall tighter energy market for the foreseeable future.

Russian-Ukraine War

The impact of Russia’s invasion of Ukraine on energy prices was immediate and global. Oil quickly jumped to its highest level in almost 14 years while wholesale natural gas prices for next-day delivery more than doubled. With the continuation of this war, sanctions on Russia have quickly been introduced and committed to by the private sector along with many nations, creating an immediate decrease in oil supply estimated around 3 million barrels per day. These barrels will take time to replace in the global market and the resulting impacts on market fundamentals are likely to continue for months if not years into the future.

For natural gas there are even harsher immediate impacts as much of Europe struggles with the decision to stop the import of Russian supply, putting 30% of their supply at risk with little ability to quickly replace it with any other source.

OPEC Status Quo Increases

Even in the face of rising pressures, OPEC+ continues to raise its output by 400,000 barrels a day each month, with recent announcements to not significantly vary from this plan. Though OPEC+ has worked with Russia in efforts to balance the global markets and stabilize prices, it has remained adamant that it will leave politics out of output decisions. There have been questions recently around whether OPEC+ even holds the ability to increase production faster than these targets, as member nations struggle to keep up with proposed targets in recent months.

Low Storage Levels in all Markets

With total OECD industry stocks at some of the lowest levels in the last 10 years along with US Crude oil stocks trending below the 5-year average, there appears to be less ability to buffer the impact of Russian production losses. Even with the recently announced 1 million barrels per day release from the Strategic Petroleum Reserves for the next 6 months, the overall math adds up to an undersupplied oil market barring any major change to demand going forward.

On the natural gas front, it is a similar story with European gas storage levels at historic lows with overall production and LNG imports unlikely to completely replace Russian gas in the near to medium term. If sanctions do cause Europe to completely move away from Russian gas, there will be extreme pressure on the demand side and potentially even gas rationing scenarios introduced. North America will fare better with more gas supply availability, but as LNG shipments headed for Europe reflect the higher pricing, there will be some upward pressure on North American natural gas pricing as well.

Accounting for overall current market conditions, current price fundamentals appear to support higher prices for the short to medium term, with long-term fundamentals also supported by current trends.

GLJ April 2022 Price Forecast

GLJ has released our latest evaluator commodity price forecast effective April 1, reflecting the current upward market sentiment seen throughout energy markets. Our oil forecast has WTI set at $72.00 USD/bbl (real) in the medium-long term while Edmonton Light crude prices have been increased to a real price of $85.25 CAD/bbl. Our gas forecast has been adjusted to reflect current market trends in the short-term, while stabilizing in the longer term at $3.30 USD/MMBtu and $3.25 CAD/MMBtu in real dollars for Henry Hub and AECO respectively.

Published On: April 6, 2022Categories: Pricing


  • Justin Mogck

    As GLJ’s Director of Commodities Research, Justin leads the creation of GLJ’s price forecasts and related market research and analysis. He has also developed expertise in both conventional and unconventional evaluations and has a variety of experience with North American A&D transactions, corporate evaluations and economic modelling.