Oil Market: JP Morgan Forecasts $75, Goldman Sachs $84 average price for 2025

Stock Market06/20/2024Mr. SmithMr. Smith
Oil refinery
Oil Refinery

Oil Prices and Future Trends

Oil prices are anticipated to peak this summer before entering a significant decline in 2025, according to analysts at Citi. Eric Lee, Citi's global energy strategist, told Yahoo Finance that global inventories are expected to build substantially next year.

On Thursday, West Texas Intermediate (WTI) rose slightly to hover above $82 per barrel, while Brent, the international benchmark price, inched above $85 per barrel. "We believe there will be a tight supply stretch through the summer, keeping prices in the low- to mid-80s for a bit longer. However, as we move into the second half of the year and into 2025, we anticipate markets becoming significantly heavier," Lee said.

Lee projects that Brent prices will fall into the $70 range later this year and into the $60 range in 2025. This prediction comes as the oil alliance OPEC+ plans to phase out voluntary production cuts, facing pressure from member countries to avoid losing market share.

Impact on Financial Markets and Investment Strategies

Lee stated, "In our base case, we anticipate 1.4 million barrels of global oil stock building next year after a roughly balanced market this year." This outlook is considered bearish for oil prices. Lee also forecasts that oil demand growth will continue to slow down, partly due to the transition to electric vehicles.

"Oil demand can grow at a slower rate relative to GDP and peak before the end of this decade," Lee added. This shift is expected to influence various sectors, including Investment management, Financial services, and Wealth management.

The predicted decline in oil prices and demand will impact Financial institutions and Investment planning strategies. Investors might consider diversifying their portfolios by including Mutual funds and exploring opportunities in renewable energy sectors.

Comparative Analysis by Major Financial Institutions

While Citi's forecast is relatively bearish, other analysts also predict declining oil prices next year. JPMorgan strategists foresee Brent averaging $75 per barrel next year, down from $83 in 2024. Natasha Kaneva, head of global commodities strategy at JPMorgan, noted, "Global oil demand growth will likely decelerate from 1.4 mbd this year to 1 mbd in 2025 as the last phase of the post-pandemic rebound dissipates, and advancing energy efficiencies and an expanding electric vehicle fleet gain ground."

Meanwhile, Goldman Sachs forecasts Brent will average $84 per barrel this year after a summer supply squeeze, predicting an average of $82 per barrel in 2025. These predictions indicate a broader market expectation of declining oil prices, which will influence Investment plans and Finance strategies.

Investors should consider these forecasts when planning their Retirement accounts and assessing their Return on investment (ROI). Utilizing tools like a Finance calculator can help in evaluating different Investment opportunities and making informed decisions.

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