As we end the year and look forward into 2024, energy prices remain volatile with much depending on weather and geopolitical factors—and understandably so, given the continued conflicts around the globe.

Of course, crude prices will depend significantly on the war in Gaza. The market first  placed a $5/bbl to $7/bbl “war premium” in place; however, as of this writing, no real barrels were actually taken off the world markets.

Still, that’s not to say that the danger of the war impacting energy supplies is gone, either. Tensions are elevated with Iranian threats. Iran is both a major oil supplier and the chief sponsor of Hamas; if Iran aids Hamas and the U.S. retaliates by tightening sanctions on Iran, the oil market will be undersupplied, which most likely would rise prices.

However, traders are currently focused on at-ready supplies, which have not been interrupted. Yet while oil is readily available, global inventories of crude remain on the low side of normal and diesel supplies are even tighter. This is as fuel demand has remained above many traders’ expectations and looks to elevate even further into the holiday season. A recent survey of Americans’ holiday travel plans found that this travel season looks to be especially busy, with 48% of respondents planning to take a trip between Thanksgiving and mid-January, and 37% expecting to take at least one flight. For prices to reach the $100/bbl area, I think you would need to see a supply distribution in a major physical crude oil hub.

On the negative side, weakening economies in both Europe and Asia should eventually pull demand lower, and prices that are too low can be just as damaging—or even more so—than prices that are too high. While $100/bbl is too high and damages a global economy, $50/bbl is too low in an inflated economy and damages oil’s infrastructure. Lower prices from here also would not stabilize the falling drilling rig rate numbers. Fortunately, unless we see a drastic escalation in the war in Gaza or a severe weakening of the U.S. economy, I do not think prices are in danger of going too far in either direction. Instead, I think prices are range bound between $75/bbl and $87/bbl as we welcome in 2024.

Turning to natural gas, prices will depend on the weather both in the U.S. and in Europe. Unlike crude, natural gas storage remains well above the five-year average. In fact, it is over 5.5% above in the U.S., as of this writing, while natural gas storage in Europe is nearly 97% full. Keep in mind the facility at Freeport, Texas, is back at full capacity, and the El Paso pipeline is flowing, after both were offline in the coldest month of last winter. Therefore, with both back online, we could see supply surpluses deplete very quickly this winter, especially if we see early cold show up in December. Natural gas exports to Mexico have also been hitting new records, which could also deplete supplies more quickly. Altogether, as we go into the end of the year, I look for natural gas prices to be $3.10 on the low side, with a possible $4.50 to $5.00 handle in late January if we see temperatures to the low end of average.

This is all to say that, when it comes to energy prices, the right answer is often “it depends.” The energy market tends to be volatile in the best of times, which is why energy prices (and food) are omitted from core inflation readings. However, given the global unrest that currently centers around the energy sector (both in Ukraine and the Middle East), volatility is more certain than ever as we round out this year and move into 2024.