Citi: Oil Market Deficit Will Support Brent Prices In Q4

Wall Street analysts at Citi have predicted that a deficit in the oil markets driven by OPEC’s recent decision to delay tapering in oil production cuts as well as the ongoing suspension of Libyan oil exports will temporarily offer support for Brent prices in the $70-$75/barrel range in Q4 2024, as reported by Reuters. 

However, Citi has warned of “renewed price weakness” in 2025, with Brent on a path to $60 per barrel thanks to a surplus of one million barrels per day.

Oil prices have rallied over the past week, with dated Brent for November delivery rising from a 2-year low of $69.19/barrel on September 10 to an intraday of $74.50 at 10.40 am ET on September 19 while WTI crude for October delivery has jumped from $65.75/barrel to $71.11 over the timeframe.

Commodity analysts at Standard Chartered are even more bullish on the oil price outlook, and have predicted that no supply glut is likely in at least Q4-2024 and H1-2025 if OPEC+ producers keep to their commitments. Last week, StanChart reported that oil markets are overlooking the imminent removal of even more barrels from the markets in the coming months. Back in July, Russia, Iraq and Kazakhstan submitted their compensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes will be fully compensated for over the next 15 months through September 2025, with Russia ‘paying back’ a cumulative 480 kb/d, Iraq 1,184 kb/d and Kazakhstan 620 kb/d.

StanChart has worked out that adding the compensation schedule to the recently announced reduction in targets due to delaying the implementation of tapering will result in OPEC production clocking in at 530 kb/d lower in Q4-2024; 540 kb/d lower in Q1 and Q2-2025 and 560 kb/d lower in Q3-2025, if all commitments are kept.