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Morgan Stanley, Goldman Sachs, Citi forecast oil price falling in Q4 and 2025

Weaker Chinese demand, strong US Shale production and end of OPEC+ cuts will force oil barrel price down anticipate investment banks

Investment bank Morgan Stanley has again cut its forecast price for a barrel of oil, expecting the international benchmark to average US$ 75 a barrel in the last quarter of the year. This is because analysts at Morgan Stanley see rising headwinds on the demand side, which has been their key reason for cutting their Q4 oil price forecast.

“The recent trajectory of oil prices has similarities to other periods with considerable demand weakness,” Morgan Stanley analysts wrote in a Monday article carried by Bloomberg, however they also wrote that it was too early to make that part of Morgan Stanley’s base-case scenario. 
 
Monday’s downward revision to oil price forecasts is Morgan Stanley’s second such cut in a little over two weeks.

At the end of August, the Wall Street bank cut Brent price forecast for the fourth quarter to US$ 80 per barrel, down from US$ 85 expected earlier.

Back then, Morgan Stanley said that the lowered oil price forecast reflected expectations of increased supply from OPEC and non-OPEC producers amid signs of weakening global demand. The bank anticipates that while the crude oil market will remain tight through the third quarter, it will begin to stabilize in the fourth quarter and potentially move into a surplus by 2025.

The fact is that on Monday in Asian trade, Brent crude prices traded at just below US$ 72 per barrel, after settling on Friday at just above US$ 71—the lowest level since June 2023.

But Morgan Stanley isn’t the only major investment bank to have cut its oil price forecasts in recent weeks. Goldman Sachs has lowered its expected range for Brent oil prices some five dollars, to US$70/US$85 per barrel, on the back of weaker Chinese oil demand, high inventories, and rising U.S. shale production. Likewise Citi anticipates prices of US$ 60 per barrel next year if OPEC+ fails to implement more production cuts, with slowing demand and strong supply from non ÓPEC producers.