Oil markets kicked off the new year in a downbeat mood, with Wall Street analysts almost unanimously predicting a huge oversupply in 2025 even if OPEC+ did not add a single barrel back into the market. Well, it’s six months on, and oil markets have continued to defy these bearish expectations.
Last month, a survey by law firm Haynes Boone LLC revealed that banks are gearing up for oil prices to fall below $60 a barrel by the middle of President-elect Donald Trump’s new term. The survey of 26 bankers showed that they expect WTI prices to drop to $58.62 a barrel by 2027, nearly $20 lower than the intraday price of $76.22 at 12.00 pm ET on Wednesday.
The oil price selloff appears to have been triggered by a return of demand pessimism thanks to last week’s report by the EIA that showed a 7.3M-barrel build in U.S. crude stocks.
Standard Chartered: demand fears are overblown.
StanChart says that traders are betting that OPEC+ will maintain the current levels of production restraint.
Standard Chartered: sentiment in the oil and commodity markets closely mirrors the beginning of 2023.
Oil traders fear that market surpluses will be larger in the current year than they were last year.
Traders expect the U.S. and Europe, not China, to be the main sources of demand weakness this time around.
Oil prices have been a rollercoaster over the past couple of months as negative catalysts frequently outshine the positive ones and vice-versa. In recent times, fears of a spillover in the conflict between Israel and Hamas, which could embroil Iran and its allies in the region, have offered considerable support to oil prices.