Citi Bank: Oil will fall to $60 a barrel in 2025
Citi expects oil prices to collapse into the $60 range by 2025 due to inventory buildup after this summer's tight market, signaling a bearish outlook despite current robust demand and higher prices.
Oil has recouped losses from early June, when OPEC+'s indication that it might start returning some supply to the market in the fourth quarter sent bearish signals across the market.
Earlier on Friday, the international benchmark, Brent crude, topped $85 a barrel, while the U.S. benchmark, WTI crude, hovered above $82 a barrel as signs of market tightening began to emerge. physicists.
The market expects solid summer demand in the third quarter, but fears that quarterly consumption growth will start to decline in the fourth quarter, putting pressure on oil prices.
Citi is one of the most prominent bears among major banks, and expects oil to fall into the $70 range at the end of this year and fall further into the $60 range in 2025, due to solid inventory build-up.
“Global inventories are going to build up a lot next year,” said Eric Lee, global energy strategist at Citi, in an interview with Y ahoo Finance this week.
“We think there is a little bit of tension [with supply] until the summer, so we see prices remaining in the low to mid-$80s for a while longer ,” the strategist added.
“ But if we look at the second half of the year and 2025, we see the markets becoming much heavier” ., that is, more loaded with inventories.
Citi also predicts a slowdown in global oil demand growth: “ Oil demand may grow at an increasingly slower pace than GDP and actually peak before the end of this decade,” Lee told Yahoo Finance.
Citi holds one of the most bearish short- and long-term views on oil prices and demand.
Others disagree with Citi
Goldman Sachs, for example, said in a report this week that “ peak oil demand is still a decade away.”
Earlier this month, the International Energy Agency said global oil demand will peak before 2030. This prediction drew criticism from OPEC, whose Secretary General Haitham Al Ghais said that “ Peak oil demand is not on the horizon” and that the IEA forecast “is a dangerous comment, especially for consumers, and will only lead to energy volatility on a potentially unprecedented scale .”
Goldman analysts, for their part, said: “ While some leading forecasters have predicted that oil demand will peak by 2030, our researchers predict that oil consumption will increase through 2034. ”
“We believe peak demand is another decade away and, more importantly, after the decade it takes to reach peak, it will stabilize, rather than decline sharply, for additional years,” write Nikhil Bhandari, co-head of Resources Research Natural and Clean Energy Asia-Pacific, and analyst Amber Cai in the team's report.
In the short term, Goldman Sachs sees Brent crude at $86 a barrel this summer, thanks to strong consumer demand, which will lead the market into a sizable deficit in the third quarter.
The investment bank also sees a minimum of $75 a barrel below Brent due to physical demand for crude oil, which tends to increase in the presence of lower prices, including in China and the United States to replenish the Strategic Petroleum Reserve (SPR).
Most banks expect oil prices to hold above $80 a barrel this summer, then fall into the $70 range in the fourth quarter and early next year.
JP Morgan expects oil prices to average $75 a barrel next year, down from an expected range of $80-$90 this summer.
Commodity analysts will be monitoring trends in interest rates and global economic growth to use as assumptions for their forecasts later in the year, but they will also be watching closely for OPEC+'s next move.
Although the group has signaled a willingness to begin unwinding some of the current supply cuts, the cartel and its non-OPEC allies, led by Russia, are unlikely to let oil prices remain in the low $70s and plummet towards the 60 dollars, since none of the producers in the alliance are able to keep their balance sheets in the black with such low prices
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The article Citi Bank: Oil will fall to $60 a barrel in 2025 comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/citi-bank-il-petrolio-crollera-a-60-dollari-al-barile-nel-2025/ on Mon, 24 Jun 2024 05:15:50 +0000.