Brent Crude Oil Price Forecast

Brent crude oil prices may see short-term support due to demand potentially exceeding supply in Q4 2024, as indicated by analysts at Citi.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies have reportedly decided to postpone tapering voluntary output cuts. This, combined with ongoing supply disruptions in Libya, is expected to lead to a deficit of approximately 0.4 million barrels per day in the final quarter of the year, according to Citi analysts.

Such factors could temporarily bolster Brent prices to the range of $70 to $75 per barrel.

Additionally, a rebound in demand from China, the world’s top oil importer, could further enhance market conditions.

However, the analysts warned of a potential renewed weakness in prices in 2025, predicting Brent could fall to $60 per barrel due to an anticipated surplus of one million barrels per day.

On Thursday, crude prices rose following a significant 50 basis point rate cut by the US Federal Reserve, even as concerns over global demand persisted. By 03:30 ET, Brent gained 0.9%, reaching $74.34 per barrel, while US crude futures (WTI) increased by 1.0% to $70.58 per barrel. The benchmarks bounced back after previous declines during Asian trading, particularly Brent, which hovered near its yearly low.

The Fed's decision to cut rates aimed to boost the economy after battling inflation, but the aggressive move raised worries about a potential slowdown in overall growth. Although Fed Chair Jerome Powell sought to address these concerns, he emphasized that the Fed would not revert to an era of ultra-low interest rates and that the neutral rate would likely be higher moving forward.

Furthermore, US government data released Wednesday showed an unexpected draw of 1.63 million barrels in crude inventories, attributed to decreased net imports and domestic production. The analysts noted that Hurricane Francine impacted US crude output, leading to a peak reduction of 732,000 barrels per day from offshore Gulf of Mexico operations. Although this draw exceeded the anticipated 0.2 million barrels decrease, it coincided with increases in distillate and gasoline inventories, raising fears about cooling US fuel demand as summer travel comes to an end.