The crude oil market is currently experiencing tight conditions, but a shift towards surplus is anticipated for the coming year, according to Morgan Stanley. The investment bank predicts Brent crude prices will decrease to the mid-to-high $70s range in 2025.
In a note issued on Friday, Morgan Stanley outlined that the market tightness will persist through the majority of the third quarter. However, equilibrium is expected to be restored by the fourth quarter. This shift will be driven by the waning of seasonal demand and the anticipated growth in both OPEC and non-OPEC supply.
Sources indicated last week that OPEC+ is unlikely to alter its output policy during a mini-ministerial meeting scheduled for next month. The group is expected to continue with its plan to gradually unwind one layer of oil output cuts beginning in October.
Morgan Stanley forecasts that OPEC and non-OPEC production will increase by approximately 2.5 million barrels per day (bpd) in 2025, outpacing demand growth.
Refinery activity is projected to peak in August of this year, with levels unlikely to match this peak until July 2025.
Morgan Stanley has kept its Brent crude price forecast for the third quarter of 2024 steady at $86 per barrel. Similarly, Goldman Sachs has maintained its third-quarter forecast at an average Brent price of $86 per barrel.
As of Monday, Brent crude prices were up 0.54% to $83.08 per barrel by 0535 GMT, while U.S. West Texas Intermediate crude futures also rose by 0.54% to $80.56 per barrel.
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