HSBC Cuts Brent Price Forecast on Reports of Anticipated Return of OPEC+ Barrels By Investing.com

Investing.com — OPEC+’s reported plan to increase oil production from Dec. 1 would mark an earlier-than-anticipated rebound in market supply, which could weigh on crude prices, according to analysts at HSBC.

In a note to clients, analysts said that if the Organization of the Petroleum Exporting Countries and its allies — known as OPEC+ — confirmed the reports, it would mark the end of a long-running supply-tightening cycle who saw the manufacturer. The group is capping around 3.4 million barrels per day from October 2022.

“The earlier rebound in OPEC+ barrels is increasingly bearish,” HSBC analysts argued, adding that they expect the oil market to be in a surplus of around 600,000 next year.

In the medium term, they also said the oil market appears to be oversupplied “as OPEC+ has no room to reverse the remaining cuts.”

As a result, they lowered their price forecasts for 2025 and beyond from $76.5 per barrel to $70 per barrel.

Oil prices fell sharply on Tuesday as worries about tepid demand growth offset concerns that rising tensions in the Middle East could hurt global supply.

By 06:10 ET, Brent was down 1% at $71.02 a barrel, while futures (WTI) traded 1.2% lower at $67.36 a barrel .

Israel said early Tuesday that its troops had begun “limited” raids against Hezbollah targets in Lebanon’s border area, a move that risks escalating a conflict in the oil-rich Middle East that threatens to embarrass the US and Iran.

However, this had limited impact as a sharp drop in manufacturing activity in China in September suggested a slowdown in future demand from the world’s biggest crude importer.

The American Petroleum Institute industry group is due to release its weekly estimate of US crude oil and fuel stockpiles for the week to September 27.