Crude Oil Prices Expected to Plummet to $70/pbrrl on Supply Surplus
Morgan Stanley has predicted a likely crude supply surplus that would force Brent prices to decline into mid-to-high $70s range, even as it said crude oil market is currently tight but next year will likely be in surplus.
The tightness will hold for most of the third quarter, the Bank said in a note, but equilibrium will return by the fourth quarter, “when seasonal demand tailwinds abate and both the Organization of Petroleum Exporting Countries, OPEC and non-OPEC supply return to growth.”
Three sources told Reuters last week that OPEC+ is unlikely to recommend changing the group’s output policy at a mini-ministerial meeting next month, leaving in place a plan to start unwinding one layer of oil output cuts from October.
Morgan Stanley said it expects OPEC and non-OPEC supply to grow by about 2.5 million barrels per day (bpd) in 2025, well ahead of demand growth.
Refinery runs are set to reach a peak in August this year, and unlikely to return to that level until July 2025, it said.
Morgan Stanley left its forecast for Brent crude prices for the third quarter of 2024 unchanged at $86 per barrel.
Earlier this month, Goldman Sachs also maintained its projection for the quarter at an average Brent price of $86 a barrel.
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