Macquarie sees ‘large surplus’ for oil in 2025, cuts oil price forecast

Weaker-than-expected demand will tip the oil market into a surplus over the next five quarters, Macquarie said in a note on Friday, as it cut its forecasts for Brent and WTI crude for the rest of the year.

“As we enter the shoulder and return season, the ‘last bad’ for oil in the form of tightness in Q3 is fading fast as our balances factor in strong oversupply over the next five quarters,” according to the Macquarie note cited by BOEreport.com.

The bank revised down its forecast for Brent crude by $2 a barrel to $80 for the rest of 2024. Macquarie cut its forecast for WTI crude by the same amount, expecting it to average $75 per barrel for the rest of the year.

The market is set to enter a “strong surplus” in 2025 as non-OPEC+ supply rises amid tepid demand growth. According to the bank, this expected significant surplus could limit the need for the OPEC+ group to start rolling back its production cuts.

This week, both OPEC and the International Energy Agency (IEA) cut their forecasts for global oil demand growth, citing weaker Chinese consumption so far this year.

Despite a second consecutive downward revision to its demand growth estimate, OPEC is still far more bullish than the IEA on Chinese and global oil consumption growth this year.

Other Wall Street banks recently cut their oil price estimates.

Falling oil demand from China, high inventories and rising US shale production prompted Goldman Sachs to cut its forecast range for Brent oil by $5 to $70-85 a barrel.

Just two weeks after cutting its Brent estimate to $80 a barrel for the fourth quarter, Morgan Stanley has cut its forecast again, now expecting the international benchmark to average $75 a barrel in the last quarter of the year. Analysts at Morgan Stanley see headwinds from the demand side, which was their key reason for cutting their Q4 oil price forecast.

By Charles Kennedy for Oilprice.com

More top reads from Oilprice.com