Morgan Stanley joined other major investment banks in slashing oil price forecasts amid expectations of a larger market surplus later this year as OPEC+ plans to raise output much more than previously expected.
Morgan Stanley cut its oil price forecasts for the remainder of the year, anticipating a bigger glut. The bank revised down its projection of Brent Crude prices to $62.50 per barrel in the third and fourth quarters of this year, down by $5 per barrel from the previous forecast.
The market glut could reach 1.1 million barrels per day (bpd) in the second half of the year, Morgan Stanley reckons. That’s an upward revision of 400,000 bpd from the previous surplus forecast.
“We interpret OPEC+’s communication as an indication that it may unwind its production quota faster altogether,” Morgan Stanley analysts, including Martijn Rats, said in a note carried by Bloomberg.
The bank sees much looser market balances now that OPEC+ plans to add more supply than it had guided just two months ago.
In an online meeting on Saturday, key OPEC+ producers led by Saudi Arabia and Russia agreed to raise collective output by 411,000 barrels per day (bpd), nearly triple the volume originally scheduled.
The move follows a similar surge announced for May and signals a sharp reversal from OPEC+ efforts to defend oil prices.
Following the announcement of another aggressive production hike, Goldman Sachs cut – again – its average oil price forecasts this year and next.
Goldman’s analysts now see Brent Crude prices averaging $60 per barrel this year, down from a previous forecast of $63 a barrel. The average price of the U.S. benchmark, WTI Crude, was now downgraded at Goldman Sachs to $56 for 2025, down from $59 a barrel previously expected.
Next year, Brent is set to average $56 a barrel, down from $58, and WTI is expected at $52, down from $55 per barrel in the previous forecast from mid-April, according to Goldman Sachs.
By Charles Kennedy for Oilprice.com
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