Market Analysis

According to Morgan Stanley, the crude oil market is currently tight, but a surplus is anticipated for the next year, with Brent prices expected to fall to the mid-to-high $70s range.

The bank's report, released on Friday, indicates that the tight market conditions will persist through most of the third quarter. However, balance is expected to return by the fourth quarter, as seasonal demand decreases and both OPEC and non-OPEC supplies begin to grow again.

Sources informed Reuters last week that OPEC+ is unlikely to alter its output policy during an upcoming mini-ministerial meeting next month, thus maintaining its plan to reduce oil output cuts starting in October.

Morgan Stanley projects that supply from OPEC and non-OPEC countries will increase by approximately 2.5 million barrels per day (bpd) in 2025, outpacing demand growth.

Refinery operations are expected to peak in August of this year and will not likely return to those levels until July 2025.

The bank has kept its Brent crude price forecast for the third quarter of 2024 at $86 per barrel. Goldman Sachs has also reaffirmed its forecast for the same period at an average Brent price of $86 a barrel.

As of Monday, Brent crude prices were up 0.54% at $83.08 per barrel by 0535 GMT, while U.S. West Texas Intermediate crude futures had also risen 0.54% to $80.56.

Paraphrasing text from "Reuters" all rights reserved by the original author.