End of an era – Rabobank

In August, Rabobank cut its Q4 2024 Brent forecast to $82 from $86. They also cut our full-year 2025 forecast to $85/bbl from $92/bbl as the market moved into balance from the deficit, according to estimates, Rabobank economists note.

The markets appear to be oversupplied next year

“Recent confirmation of weak demand data from China and the US and a looming supply glut with a long-term demographic shift has led us to revise our models and forecasts: we now expect Brent to average 71 dollars in Q4 2024. Further, we forecast 2025. prices will average $70, in 2026 they will rise to $72 and in 2027 they will trade around $75.”

“According to our sensitivity analysis, an oversupply of half a million barrels per day implies a $10 change in Brent prices. Markets appear to be oversupplied next year by around 700,000 barrels per day, reflecting the dramatic move in our forecasts.”

“We still expect US oil production to flatten and decline in 2025, along with Russian offset cuts, to inject some price appreciation later in the year and into 2026, but overall the market appears to be on a trajectory stable in the long term. Lower prices in the US will discourage new drilling.”