Crude Oil Outlook

Crude oil prices are facing a three-month losing streak and are expected to continue declining, according to analysts at Macquarie. They state that weak supply and demand fundamentals will overshadow any potential boosts from geopolitical tensions in the Middle East or stimulus efforts from China.

Key Insights

• Price Forecast: Analysts anticipate a decrease in crude prices through the end of 2024, as bearish fundamentals prevail over geopolitical factors.
• Supply and Demand: The outlook for supply and demand is critical, with expectations of increased growth in Q4 driven by U.S. production growth and the return of OPEC+ barrels, alongside oil demand growth trends below 1 million barrels per day.
• Market Sentiment: A sell-off in Brent crude returned to its 50-day moving average due to broader bearish market sentiment, with a notable decrease in speculative net length for both WTI and Brent.
• Future Expectations: Macquarie suggests that without a significant shift in supply dynamics or stronger economic data, oil prices will continue to be under pressure. They believe stimulus efforts will not materially affect oil demand growth until the property sector stabilizes and rebounds.

Conclusion

Despite ongoing geopolitical tensions and potential stimulus from China, weak fundamentals are likely to keep oil prices low, according to analysts at Macquarie.