Brent crude oil is set to fall to US$71 a barrel for the rest of the year and to average US$70 in 2025, according to the latest estimate from Rabobank.
After starting September at just under US$80, the price of a barrel of Brent tumbled to a two-and-a-half-year low below US$70 two weeks ago, before recovering to around US$75 lately.
The Dutch bank had already reduced its forecast to US$82 for the rest of 2024 but recent confirmation of poor Chinese and US demand data and a looming glut of supply has caused us to revisit its models, it said.
“Further out, we forecast 2025 prices to average $70, 2026 to rise to $72, and 2027 to trade around the $75 mark.”
According to Rabobank, an oversupply of half-million barrels per day implies a US$10 shift in Brent prices and it estimates that markets appear to be oversupplied next year by about 700,000 barrels per day.
Those estimates might change depending on US tight oil production in 2025 alongside Russian compensation cuts but overall the market looks to be on a longer-term flat trajectory.
If demand continues at its current meagre pace Rabobank sees Brent trading in the US$70s until either demand picks up, US production flattens and declines, or Guyanese and Brazilian production can cause a surfeit.
For now, 2.2m b/d of OPEC+ supply remains sidelined and the December output is likely to be reduced or pushed back.
However, non-OPEC+ supply growth is expected to be about 700,000 b/d next year, with the US decreasing production down to 13.2 million.