WTI - the fate of oil next year!WTI oil is above the EMA200 and EMA50 in the 4-hour timeframe and is moving in its ascending channel. In case of a downward correction towards the zone, the next purchase of oil will be offered with a reward suitable for us.
Analysts believe that the global oil market will be well-supplied in the coming year due to increased oil production from non-OPEC+ countries and limited growth in global oil demand. Despite uncertainties surrounding 2025, experts maintain a cautious outlook on crude oil prices.
By the end of 2024, investment banks projected that oil prices in 2025 would remain around $70 per barrel of Brent.
However, the potential escalation of trade tensions poses a downside risk to prices.
Market observers are aware that oil price forecasts are often inaccurate. Yet, considering current fundamentals and geopolitical developments, experts generally hold a more negative than positive view on oil prices for the next year.
Most analysts and investment banks anticipate a supply surplus in the oil market for 2025, even if OPEC+ adheres to its current plan to reduce production starting in April 2025.
In December, OPEC+ announced a delay in its planned 2.2 million barrels per day production cut from January to April 2025. Additionally, the group extended the timeline for fully reversing these cuts to September 2026.
According to investment banks, while OPEC+’s decision may reduce the anticipated surplus, the market will still experience oversupply.
ING commodity strategists Warren Patterson and Ewa Manthey noted in a recent report: “For now, we forecast the oil market to face a surplus next year, although much will depend on OPEC+’s production policies.”
The International Energy Agency (IEA) has long predicted a significant supply surplus in 2025. In its monthly report, the IEA stated that even if OPEC+ maintains its current production levels throughout 2025, there would still be a daily surplus of 950,000 barrels. If OPEC+ halts voluntary production cuts at the end of March 2025, this surplus could rise to 1.4 million barrels per day.
The IEA also forecasts that global oil demand will increase by 1.1 million barrels per day next year. However, this growth will not be sufficient to absorb the additional supply from non-OPEC+ producers, primarily the U.S., Brazil, and Guyana.
Additionally, weak consumption data from China indicates that demand this year has been below initial projections. OPEC has also reduced its oil demand growth forecasts for 2024 for five consecutive months.
In its December Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) reported that if OPEC+ implements its recent production cut decisions, global oil inventories would rise by an average of 100,000 barrels per day starting in the second quarter of next year.
The EIA further predicted that this inventory increase would exert downward pressure on crude oil prices by late 2025, with Brent prices declining from an average of $74 per barrel in Q1 2025 to $72 per barrel in Q4 2025.
The agency estimates that the average annual Brent oil price in 2025 will be $74 per barrel, down from this year’s average of $80 per barrel. Recent surveys also reflect this trend, as analysts have lowered their oil price forecasts due to weak demand and robust supply growth.
Some experts argue that stricter U.S. sanctions on Iran and heightened geopolitical tensions might support prices early next year. However, overall weak demand forecasts are expected to exert significant downward pressure on oil prices.
China’s accommodative monetary policy could boost its economy and oil demand, but President-elect Trump’s promise to increase tariffs on China poses risks to economic growth, trade, and oil demand. Saxo Bank recently stated that China’s latest economic stimulus measures and the likelihood of further monetary easing could offset the impact of U.S. tariffs in 2025, signaling Beijing’s determination to prevent a severe economic downturn.
