Inertia nonetheless dominates the oil markets, with little change from the disorientation brought on by the frenzy of U.S. coverage modifications.
That’s what analysts at Commonplace Chartered Financial institution, together with the corporate’s head of commodities analysis, Paul Horsnell, mentioned in a report despatched to Rigzone by Horsnell late Tuesday, including that “Brent has continued to cling doggedly to the origin of any graph of worth modifications”.
Within the report, the analysts mentioned “volatility stays low” noting that “whereas 30-day realized annualized Brent volatility rose 2.4 proportion factors week on week to 18.9 p.c at settlement on 24 February, it stays throughout the decrease 10 p.c tail of its 10-year distribution”.
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Regardless of the shortage of motion yr so far, there are some indicators that the trail of least resistance within the quick time period may be decrease, the Commonplace Chartered Financial institution analysts said within the report, highlighting that they “would level to a few specifically”.
“First, market technicals have turned comparatively bearish within the very quick time period. Second, we predict most machine-learning or AI fashions have turned short-term bearish,” the analysts mentioned within the report, noting that Commonplace Chartered’s personal machine-learning mannequin is indicating a $1.65 per barrel week on week fall for March 3 settlement.
“Lastly, the annual London Worldwide Vitality (IE) Week spherical of analysis, marketing consultant and dealer occasions seems to date to have accentuated the damaging by way of the oil market outlook,” they added.
“In earlier years the temper of the week has typically been self-reinforcing, with a big cadre of merchants returning to their buying and selling desks having all heard the identical damaging parts,” they continued.
The analysts said within the report that they “suppose the bearishness evidenced in IE Week has been considerably overdone”.
“A part of it’s merely a follow-through from the analyst negativity that characterised the latter half of 2024,” they mentioned.
“The consensus then was of huge and imminent market surpluses pushed by expectations of a flood of incremental non-OPEC+ provides. Whereas the expected massive surpluses didn’t happen in H2-2024 or to this point in Q1-2025, they’ve their echo in additional predictions of surplus, albeit smaller and delayed additional,” they added.
“The assumption in a sudden surge of non-OPEC+ provides has additionally not pale, regardless of final yr’s U.S. slowdown, the underperformance of Brazil relative to forecasts and ongoing tightness within the immediate crude oil market,” they went on to state.
The analysts famous within the report that U.S. oil liquids provide development halved in 2024 and mentioned they count on it to halve once more in each 2025 and 2026. They added that they don’t see non-OPEC+ provide development as the first driver of incremental balances in both yr.
Commonplace Chartered Financial institution’s report confirmed that the corporate expects the ICE Brent close by future crude oil worth to common $82 per barrel within the first quarter of 2025, $84 per barrel within the second quarter, $89 per barrel within the third quarter, $93 per barrel within the fourth quarter, and $93 per barrel general in 2026.
Rigzone has contacted the Trump transition workforce, the White Home, and the U.S. Division of Vitality (DOE) for touch upon Commonplace Chartered Financial institution’s report. On the time of writing, not one of the above have responded to Rigzone.
In response to a analysis notice despatched to Rigzone by the JPM Commodities Analysis workforce on Friday, J.P. Morgan expects the Brent crude worth to common $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, and $61 per barrel general in 2026.
A BofA World Analysis report despatched to Rigzone on Monday revealed that BofA World Analysis sees Brent averaging $75 per barrel in 2025 and $73 per barrel in 2026.
A BMI report despatched to Rigzone by the Fitch Group on February 14 confirmed that BMI anticipated the entrance month Brent crude worth to common $76 per barrel this yr.
To contact the creator, e-mail andreas.exarheas@rigzone.com
