Despite the recent fluctuation around $80 per barrel, Wall Street generally holds the view of &#34;short-term optimism, long-term pessimism&#34;, with Citigroup even calling for oil prices to fall to $60 next year.
Citigroup released a jaw-dropping oil price forecast report this week, predicting that by 2025, international oil prices will drop to the range of $60 per barrel. This forecast highlights Citigroup's pessimistic view of the crude oil market, contrasting sharply with the current strong demand and high oil prices in the market.
Eric Lee, Citigroup's global energy strategist, stated in a media interview:
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We believe that there will be a period of tight supply this summer, and we expect oil prices to hover in the range of $80 per barrel for a period of time. However, looking ahead to the second half of this year until 2025, we do see that market supply will become more abundant.
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Citigroup expects a significant increase in global crude oil inventories next year along with a slowdown in demand:
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Global crude oil inventories are expected to increase significantly next year, while the growth in global oil demand is expected to slow down. The growth rate of oil demand relative to GDP may become slower and may actually peak before the end of this decade.
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It is worth mentioning that Citigroup's forecast is the most pessimistic among many investment banks. Most institutions expect oil prices to remain above $80 per barrel this summer, but to drop to the $70 range in the fourth quarter and early next year. JPMorgan expects an average oil price of $75 per barrel next year, a slight decrease from the expected range of $80-90 per barrel this summer.
Goldman Sachs stated in a report this week that oil demand growth will continue until 2034:
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It will take another decade for oil demand to peak, and more importantly, in the decade after reaching its peak, demand will remain stable rather than sharply declining.
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In the near term, Goldman Sachs expects that due to strong consumer demand, Brent crude oil prices will reach $86 per barrel this summer, with a significant supply shortage expected in the third quarter. The bank also believes that due to Chinese demand and the replenishment demand of the U.S. Strategic Petroleum Reserve (SPR), the lower limit of Brent crude oil prices will remain at $75 per barrel.
Next, analysts will closely monitor interest rate trends and global economic growth as the basis for later forecasts this year. They will also closely watch OPEC+'s next steps. Although the organization has expressed willingness to begin easing some of the current supply cut measures, OPEC+ is unlikely to let oil prices linger at $70 or fall to the $60 range in the long term, as no producing country in the alliance can balance its budget at these relatively low prices

Citigroup expects that global crude oil inventories will increase significantly next year, while global oil demand growth will slow down, with oil demand possibly peaking before the end of this decade

Short-term optimism, long-term pessimism? "The biggest bear in oil prices" Citigroup: It will drop to 60 next year!