Oil market is "too negative" - Barclays

The oil market is suffering from weak sentiment going into 2025, but Barclays (LON:BARC ) sees the possibility that the market is too negative and risks could be tilted to the upside. 

At 09:25 ET (14:25 GMT), the benchmark Brent contract fell 0.9% to $71.41 a barrel, and is set to end the week around 2% lower.

“The prospect of an oversupplied oil market into 2025 is not a backdrop that is likely to encourage new investors into energy equities,” said analysts at Barclays, in a note. “Yet there is a possibility that the market is too negative on a well-flagged oversupply in oil, and that beyond 2025 the picture is supportive of higher prices.”

Oil market sentiment remains weak into 2025 with both our forecasts and most agencies showing a surplus, even without OPEC+ reversal of cuts, said Barclays.

This is prompting significant discussion across the market for the potential of $50-60/bbl oil for 2025.

“We believe the Brent price will spend more time above $70/bbl than below it given the supply-demand dynamics have been well flagged for some time,” Barclays added.

Overall, it is very possible that underlying supply-demand balances will tighten relative to expectations into 2025, supporting oil prices, particularly as 2026 balances already screen tighter, Barclays said.

But the level of OPEC+ spare capacity is likely to limit upside potential outside of a material uncompensated drop-off in Iranian volumes.

 

Source: Investing.com