Oil market sentiment continues to enhance, albeit very regularly and susceptible to reversals, after the lows hit throughout London’s IE Week in February.
That’s what analysts at Normal Chartered Financial institution, together with the corporate’s Commodities Analysis Head Paul Horsnell, stated in a report despatched to Rigzone late Tuesday by Horsnell, including that the advance has enabled costs to rise about $5 per barrel from their early-month lows.
“We listed among the causes for the worth upside in an earlier report, together with technicals, geopolitical threat, and reappraisals of shale oil economics and international balances; the reappraisals suggest that the potential sustainable draw back from present costs is pretty restricted,” the analysts stated within the report.
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“The availability surpluses the market had feared have but to materialize, and the outlook for Q2 and Q3 doesn’t recommend that any surplus is imminent,” they added.
The analysts projected within the report that international demand will exceed provide by 0.9 million barrels per day within the second quarter of this yr and by 0.5 million barrels per day within the third quarter.
“The U.S. Vitality Info Administration (EIA) is extra cautious, seeing extra demand at 0.1 million barrels per day in Q2 and a balanced market in Q3,” the analysts highlighted within the report.
“Each the EIA and our forecasts challenge a slight stock draw throughout 2024 and 2025 mixed, projections that sit uneasily with the speak of glut that has dominated a lot analyst and media commentary over the previous yr,” they added.
“Nonetheless, whereas sentiment is best, up to now that enchancment has primarily come from merchants discounting the probability of costs shifting considerably decrease,” they continued.
“The majority of opinion on potential worth upside stays extremely conservative; the present Bloomberg analyst consensus is flat for the remainder of the yr and into Q1-2026 and is just barely above the market curve,” they identified.
The Normal Chartered Financial institution analysts famous within the report that they suppose the early-year energy in international oil demand has performed a key position in moderating excessive bearishness amongst some merchants.
“We famous in a latest report that international oil demand has made a robust begin to 2025,” they stated within the report.
“Primarily based on quite a lot of nationwide sources in addition to the 19 March Joint Organizations Information Initiative (JODI) launch, we estimate that demand averaged 102.77 million barrels per day in January, a yr on yr improve of two.19 million barrels per day,” they added.
“That is in keeping with the EIA estimate for January, which put demand at 102.74 million barrels per day and progress at 1.85 million barrels per day,” they continued.
The analysts famous within the report that January is often the seasonal low level for international demand.
“We count on demand to maneuver above 105 million barrels per day for the primary time in June earlier than reaching a 2025 excessive of 105.6 million barrels per day in August,” they stated.
“Whereas the primary draw back threat to demand comes from U.S. tariff insurance policies and the financial uncertainty they create, for now demand-side fundamentals seem strong regardless of detrimental sentiment,” the analysts added.
The Normal Chartered Financial institution analysts went on to state within the report that, whereas sentiment amongst most merchants has improved in latest weeks, speculative funds stay cautious, with a bias in the direction of detrimental positioning, significantly in WTI.
“Our WTI money-manager positioning index fell 9.8 week on week to -69.8 within the newest positioning knowledge, whereas our Brent money-manager positioning index rose by 21.7 week on week to +16.4,” they stated within the report.
“Positioning throughout the power complicated stays primarily detrimental, with the demand results of U.S. tariff coverage and the provision results of potential U.S.-Russia cooperation amongst speculative merchants’ important issues,” they added.
Within the report, Normal Chartered projected that the ICE Brent close by future crude oil worth will common $75 per barrel within the first quarter of this yr, $73 per barrel within the second quarter, $77 per barrel within the third quarter, $82 per barrel within the fourth quarter, $85 per barrel within the first quarter of subsequent yr, and $83 per barrel within the second quarter of 2026.
Rigzone has contacted the White Home and the Division of Info and Press of the Russian Ministry of International Affairs for touch upon Normal Chartered Financial institution’s report. On the time of writing, neither have responded to Rigzone.
In a analysis be aware despatched to Rigzone by the JPM Commodities Analysis workforce late Monday, analysts at J.P. Morgan stated the estimated worth of open curiosity throughout power markets “elevated by $14.5 billion week on week (2.3 % week on week) and is now at a four-week excessive of $644 billion following a rise in crude and refined product costs”.
“Contract-based inflows reached~$4.7 billion week on week, largely into crude ($2 billion week on week) and pure gasoline markets ($1.7 billion week on week),” the J.P. Morgan analysts added.
“Our oil strategists flag that regardless of escalating tensions, Brent implied volatility is low, and oil costs commerce under honest worth, whereas gold hits a brand new all-time excessive,” they continued.
“We count on Brent costs to rise to the mid- to high-$70s within the coming months, then fall under $70, ending the yr within the mid-$60s, averaging $73. Our 2026 outlook is bearish, with 2025 surpluses dragging costs to the excessive $50s by year-end,” the analysts projected within the be aware.
A analysis be aware despatched to Rigzone by Natasha Kaneva, Head of International Commodities Technique at J.P. Morgan, on March 20 confirmed that J.P. Morgan anticipated the common Brent worth to return in at $74 per barrel within the first quarter of this yr, $77 per barrel within the second quarter, $73 per barrel within the third quarter, $69 per barrel within the fourth quarter, $64 per barrel within the first quarter of 2025, $63 per barrel within the second quarter, $59 per barrel within the this quarter, and $57 per barrel within the fourth quarter of 2026.
A BMI report despatched to Rigzone by the Fitch Group on March 21 confirmed that BMI sees the entrance month Brent Crude worth averaging $76 per barrel in 2025 and $75 per barrel in 2026. BMI is a unit of Fitch Options.
To contact the creator, e-mail andreas.exarheas@rigzone.com
