Morgan Stanley has again revised its Brent crude price forecasts downward, citing mounting demand challenges and abundant supply. According to a note from analysts led by Martijn Rats, the global benchmark is now expected to average $75 a barrel in the fourth quarter. This is a decrease from an earlier projection of $80 for the same period, which had already been reduced from a prior forecast of $85 just last month. Forecasts for most of the coming year have also been slightly adjusted downward.
Recently, Brent crude prices have plummeted to their lowest levels since late 2021. This decline is attributed to persistent concerns over weakening demand from China and indications of a potential slowdown in the US economy. Concurrently, ample output has led OPEC+ to postpone plans to ease its production curbs.
“The recent trajectory of oil prices bears similarities to previous periods marked by significant demand weakness,” Rats and his colleagues noted in their report dated Sept. 9. They observed that time spreads—price comparisons along the futures curve—suggested the potential for “recession-like inventory builds.” However, they emphasized that it was too early to adopt this scenario as the bank’s base case.
Morgan Stanley’s reassessment of the oil market outlook has been echoed by other leading financial institutions. Last month, Goldman Sachs Group Inc. downgraded its forecast, and more recently, Citigroup Inc. indicated that the market appeared oversupplied, predicting that prices could average $60 a barrel in 2025 unless OPEC+ implements deeper production cuts.
Brent crude, which plummeted almost 10% last week, traded near $72 a barrel on Monday. Major commodity trader Trafigura Group, speaking at an industry conference in Singapore, forecasted that prices are likely to decline into the $60s in the near future.