The crude oil market is currently tight but is expected to shift into surplus next year, with Brent crude prices likely dropping to the mid-to-high $70s range, according to Morgan Stanley.
In a note released on Friday, the bank indicated that tight conditions will persist through most of the third quarter. However, by the fourth quarter, market balance is anticipated as seasonal demand decreases and both OPEC and non-OPEC supply start to increase.
Sources informed Reuters last week that OPEC+ is unlikely to adjust its output policy at an upcoming mini-ministerial meeting. The current plan to gradually reduce oil output cuts from October is expected to remain in place.
Morgan Stanley forecasts that OPEC and non-OPEC supply will rise by approximately 2.5 million barrels per day (bpd) in 2025, surpassing demand growth. Refinery activity is predicted to peak in August this year but is not expected to reach those levels again until July 2025.
The bank has kept its Brent crude price forecast for the third quarter of 2024 at $86 per barrel. Goldman Sachs has also maintained its projection for the same period at an average Brent price of $86 per barrel.
As of Monday, Brent crude prices were up 0.54% at $83.08 per barrel by 05:35 GMT, while US West Texas Intermediate crude futures also rose by 0.54%, reaching $80.56.