Banks Cut 2025 Oil Price Forecast Below $60, Survey Shows

A recent survey by Haynes Boone LLP indicates that banks are lowering their 2024 average oil price forecasts to below $60 per barrel, specifically $58.30 for West Texas Intermediate (WTI). This represents a 5.8% decrease from their December predictions, driven by increased OPEC+ production and stagnant crude demand growth. The revised forecast contrasts with WTI's recent settlement at $63.41, suggesting potential downward pressure on oil prices.

Analysis

A recent survey of 28 banks, conducted by Haynes Boone LLP, indicates a notable downward revision in oil price expectations for the current year. The consensus forecast for West Texas Intermediate (WTI) crude now averages $58.30 per barrel, a 5.8% decrease from the projections made in a December survey. This more bearish outlook is reportedly driven by anticipated increases in OPEC+ production combined with flat growth in crude oil demand. Significantly, this revised average forecast of $58.30 is substantially below WTI's Tuesday settlement price of $63.41, suggesting that surveyed financial institutions anticipate downward pressure on oil prices or see current levels as unsustainable. The prevailing sentiment reflected in this forecast adjustment is moderately negative, underscoring concerns about a potential supply-demand imbalance.

Key Decisions for Investors

• Investors should consider the implications of a $58.30 WTI average price forecast, which is 5.8% lower than previous bank estimates and below the recent $63.41 settlement, potentially signaling downside risk for long oil positions.
• The forecast reflects expectations of increased OPEC+ supply and stagnant demand; therefore, closely monitoring OPEC+ announcements and global oil consumption data is critical for gauging price direction.
• Given the bearish sentiment and the gap between current prices and revised bank forecasts, investors might evaluate strategies that could benefit from or hedge against potential oil price declines or increased volatility in the energy markets.