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Citigroup analysts predict a drop in oil prices, with a forecast of $60 per barrel in 2025. This represents a potential decline of over 20% compared to current market expectations.
Citigroup’s global commodities team on Wednesday said crude oil has missed out on what has been a “spectacular year for some commodities” and has been mostly range bound with volatility at about 10 year lows.
The investment bank said it sees nominal upside risk for crude oil in the third quarter and continues to point to Brent crude prices of $55-$60/bbl in 2025.
Citi retained its 0-3 month forecast of an $82/bbl price for Brent, saying it’s likely the benchmark will hold close to current values.
The bank forecast global crude inventories will fall in July and August, amid a typical summer increase in demand, brisk refinery runs and continuing geopolitical and weather risks.
The bank has been consistent in its suggestion that 2025 will be a down year for crude. Analysts believe that Brent prices will fall by about 20% below 2025 forward numbers, which settled mixed on Tuesday from $76.30/bbl in December to $79.72/bbl in January.
Citi said a bearish stance is warranted even if OPEC+ extends all production cut through 2025. If the cartel follows through on its recent promise to unwind some of the 2.5 million b/d in reduction, the bank predicted a “very large surplus” will follow.
Citi’s pricing deck is lower than all of its peers. The bank has Brent slipping to $74/bbl in the fourth quarter and put the initial first-quarter 2025 price at $65/bbl. It said it expects Brent to slip to $60/bbl in Q2 and Q3, before ending next year at $55/bbl. Price projections for WTI are $4/bbl lower.
The bank’s base case has OPEC+ maintaining its current production and calculates forward days of demand cover dropping from 62 to 60 when winter arrives. It said that should rise to 65 days next year.
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