Simply two weeks after decreasing its Brent oil value estimate to $80 per barrel for the fourth quarter, Morgan Stanley minimize once more its forecast, now anticipating the worldwide benchmark to common $75 a barrel within the final quarter of the yr.
Analysts at Morgan Stanley see rising headwinds on the demand aspect, which has been their key purpose for chopping their This autumn oil value forecast.
“The latest trajectory of oil costs is similar to different intervals with appreciable demand weak spot,” Morgan Stanley analysts wrote in a Monday word carried by Bloomberg.
The time spreads on the oil’s futures curve have been signaling “recession-like stock builds,” the analysts famous.
Nonetheless, they wrote that it was too early to make that a part of Morgan Stanley’s base-case situation.
Monday’s downward revision to grease value forecasts is Morgan Stanley’s second such minimize in a bit of over two weeks.
On the finish of August, the Wall Road financial institution minimize its Brent value forecast for the fourth quarter to $80 per barrel, down from $85 anticipated earlier.
Again then, Morgan Stanley mentioned that the lowered oil value forecast mirrored expectations of elevated provide from OPEC and non-OPEC producers amid indicators of weakening international demand. The financial institution anticipates that whereas the crude oil market will stay tight by means of the third quarter, it’ll start to stabilize within the fourth quarter and probably transfer right into a surplus by 2025.
Early on Monday in Asian commerce, Brent Crude costs traded at just under $72 per barrel, after deciding on Friday at simply above $71—the bottom stage since June 2023.
Morgan Stanley isn’t the one main funding financial institution to have minimize its oil value forecasts in latest weeks.
Goldman Sachs has lowered its anticipated vary for Brent oil costs by $5 to $70-$85 per barrel, on the again of weaker Chinese language oil demand, excessive inventories, and rising U.S. shale manufacturing.
Citi, for its half, sees $60-per-barrel oil costs subsequent yr if OPEC+ fails to implement extra manufacturing cuts, amid slowing demand and powerful provide coming from non-OPEC producers.