Morgan Stanley has once again reduced its Brent oil price forecast for the fourth quarter. Just two weeks after lowering its estimate to $80 per barrel, the bank now expects the international benchmark to average $75 per barrel in the final quarter of the year.
Analysts at Morgan Stanley attribute this new forecast to increasing concerns about demand. They noted that the current oil price trends resemble past periods of significant demand weakness. In a note released on Monday and reported by Bloomberg, the analysts pointed out that oil futures are indicating potential “recession-like inventory builds.”
Despite these signals, they cautioned that it is too early to include this scenario in Morgan Stanley’s main forecast.
This adjustment marks Morgan Stanley’s second reduction in its oil price forecast in just over two weeks. At the end of August, the bank had already lowered its Brent price prediction for the fourth quarter from $85 to $80 per barrel. This earlier reduction was based on anticipated higher supply from OPEC and non-OPEC producers, coupled with signs of weakening global demand. Morgan Stanley had also projected that while the crude oil market would remain tight through the third quarter, it might start stabilizing in the fourth quarter and possibly enter a surplus by 2025.
As of early Monday trading in Asia, Brent Crude was priced just below $72 per barrel, down from just above $71 on Friday, marking the lowest level since June 2023.
Morgan Stanley’s revision follows similar moves by other major investment banks. Goldman Sachs has cut its Brent oil price range by $5, now forecasting $70-$85 per barrel, due to weaker Chinese demand, high inventories, and rising U.S. shale production. Citi has projected oil prices could fall to $60 per barrel next year if OPEC+ does not impose further production cuts, given the slowing demand and strong supply from non-OPEC producers.