Macquarie Sees “Heavy Surplus” for Oil in 2025, Cuts Oil Price Forecast

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

“As we enter shoulder and turnaround season, the ‘last hurrah’ for oil in the form of Q3 tightness is quickly fading as our balances contemplate heavy oversupply across the next five quarters,” according to the Macquarie note cited by BOEreport.com.

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

The market is set to tip into a “heavy surplus” in 2025 as non-OPEC+ supply is set to increase amid tepid demand growth. This expected heavy surplus could limit the need for the OPEC+ group to begin unwinding their production cuts, according to the bank.

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

Despite the second consecutive downward revision of its demand growth estimate, OPEC is still much more optimistic than the IEA on Chinese and global oil consumption growth this year.

Other Wall Street banks have also recently lowered their oil price estimates.

Weaker Chinese oil demand, high inventories, and rising U.S. shale production have prompted Goldman Sachs to reduce its expected range for Brent oil prices by $5 to $70-$85 per barrel.

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