Citi and Bank of America see oil prices could reach $60, by Investing.com

Investing.com — Strategists at Citi Research said oil prices could fall to around $60 a barrel by 2025, citing a significant market glut as the main driver.

While recent supply disruptions in Libya and a delayed production cut by OPEC+ have provided short-term support for Brent prices in the $70-$72 range, Citi sees this as temporary.

“At the time of writing, markets have not reacted to the OPEC+ decision, with Brent almost flat until the September 4 close. However, the Libyan situation could take months rather than a week to resolve, the strategists wrote.

They highlight the likelihood of a strong market surplus next year, pushing prices lower.

“We recommend selling on a rebound to around $80 Brent, while looking at a drop to the $60 range in 2025 as a sizeable market glut emerges,” the note said.

OPEC+ has delayed the start of a planned production cut from October 2024 to December 2024, with the process now scheduled to end by the end of 2025. This decision comes in response to recent market weakness and price declines despite continued oil disruptions Libyan. supplies and broader economic concerns in the US and China.

Separately, Bank of America’s commodity research team revised down its price forecast to $75 a barrel for the second half of 2024, from nearly $90, and for 2025, from $80 dollars.

The team expresses concern about rising global oil inventories despite OPEC+ delaying planned production increases. They note that weaker demand growth, combined with record OPEC+ capacity exceeding 5 million barrels per day, has dampened the outlook for oil prices.

“In fact, we now see Brent oil prices moving from the top to the middle of our unchanged $60-$80/bbl range over the medium term faster than previously warned,” BofA strategists said. This excess capacity, along with slower demand, also reduces the risk of price spikes from potential geopolitical disruptions.