Morgan Stanley predicts crude oil market tightening to ease in 2024, Brent prices to fall

July 22 (Reuters) – The crude oil market is currently tight, but Morgan Stanley predicts a surplus next year, with Brent prices expected to fall to the mid-to-high $70s range.

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According to a note from the bank on Friday, the market tightening will persist for most of the third quarter of this year. However, balance is expected to return by the fourth quarter as seasonal demand eases and both OPEC and non-OPEC supply increases.

Three sources told Reuters last week that OPEC+ was unlikely to recommend changes to the group’s production policy at an upcoming mini-ministerial meeting next month. The current plan is to begin removing a layer of oil production cuts starting in October.

Morgan Stanley estimates that OPEC and non-OPEC supply will increase by about 2.5 million barrels per day (bpd) in 2025, outstripping demand growth. The bank also noted that refinery operations are expected to peak in August this year and not return to that level until July 2025.

The bank maintained its forecast for Brent crude oil prices for the third quarter of 2024 at $86 a barrel. Earlier this month, Goldman Sachs also maintained its forecast for the quarter at an average Brent price of $86 a barrel.

Since Monday, Brent crude oil prices were up 0.54 percent at $83.08 a barrel by 05:35 GMT, while U.S. West Texas Intermediate crude futures were up 0.54 percent at $80.56.