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Crude Oil Market Outlook: Tight Now, Surplus Ahead
The crude oil market finds itself in a tight spot at present, but projections indicate a shift towards a surplus next year, with Brent prices expected to drop into the mid-to-high $70s range. According to Morgan Stanley, the current market tightness is likely to persist through most of the third quarter. However, a balance is anticipated to return by the fourth quarter as seasonal demand decreases and both OPEC and non-OPEC supply begin to grow.
Supply and Demand Dynamics
Sources reveal that OPEC+ is unlikely to alter its output policy in the upcoming mini-ministerial meeting next month. This decision aligns with the existing plan to start easing oil output cuts from October. Morgan Stanley forecasts that supply from OPEC and non-OPEC entities will grow by approximately 2.5 million barrels per day (bpd) in 2025, outpacing the growth in demand.
Refinery Runs and Price Projections
Refinery operations are expected to reach their peak in August this year, with a similar level of activity unlikely to be seen again until July 2025. Despite the current market conditions, Morgan Stanley has maintained its forecast for Brent crude prices at $86 per barrel for the third quarter of 2024. In line with this, Goldman Sachs also upheld its earlier forecast, projecting an average Brent price of $86 a barrel for the same period.
Current Market Prices
As of Monday, Brent crude prices saw a modest increase, standing at $83.08 per barrel, up by 0.54% at 0535 GMT. Similarly, U.S. West Texas Intermediate crude futures also experienced a 0.54% rise, reaching $80.56 per barrel.
