Oil is stuck in a tug of war, Naeem Aslam, Chief Market Analyst at Zaye Capital Markets, said in a comment sent to Rigzone on Monday.
“Geopolitics are adding short term volatility and keeping prices supported, but persistent oversupply, rising inventories, and weakening demand signals are capping any real upside,” Aslam said in the statement.
“Unless there’s a major supply shock, crude is likely to stay range bound around the low $60s rather than break higher,” Aslam added.
A BofA Global Research report sent to Rigzone on December 18 noted that Brent broke below $60 per barrel that week “on news that China crude oil inventories continued to balloon during the past week, even though much of the oil is likely set to go into strategic storage”.
“The reality is that crude oil prices have been falling since OPEC+ announced a return of idle production in June 2024, as incremental volumes have exacerbated an already-sluggish market environment for crude oil,” the BofA report stated.
“While near dated crude oil prices have come down significantly, long dated prices have only fallen by a few dollars,” it added.
That report went on to state that “a global projected surplus of two million barrels per day means that crude oil prices should average substantially less in 2026 than they did in 2025”.
“Heading into next year, we remain only somewhat bearish on prices despite the large projected surplus, as we do not believe it is in OPEC’s self-interest to drive Brent below $50 per barrel,” the report noted.
The report went on to project that the Brent price will average about $60 per barrel next year “compared to almost $69 per barrel this year”.
In a statement sent to Rigzone by the Enverus team on December 16, Enverus subsidiary Enverus Intelligence Research (EIR) projected that the Brent price will average $55 per barrel in 2026. According to the statement, EIR sees the Brent price rising from an average of $50 per barrel in the first half of next year to an average of $60 in the second half.
“EIR projects oil prices will weaken in 2026, with Brent crude expected to average $55 per barrel,” EIR noted in that statement.
“Near term oil price pressure reflects global inventory levels approaching highs last seen during the pandemic and the shale price war,” it added.
EIR outlined in the statement that it “adopts a bullish stance” beyond 2026.
“OPEC-12 liquids output is near historic highs and could tap untested spare capacity in coming years, while long term oil demand projections have strengthened,” EIR said in the statement.
“At the same time, global oil and gas supply projects are declining due to underinvestment – setting the stage for tighter balances and higher prices later in the decade,” it added.
In the statement, EIR Director Al Salazar said, “our analysis shows that while short term pressures will weigh on oil and gas prices, both markets become supply short post 2026”.
“This should pave the way for renewed bullish momentum through the rest of the decade,” he added.
A report sent to Rigzone by the Macquarie team on December 5 showed that Macquarie was projecting that the Brent price will average $68.21 per barrel overall in 2025 and $60.75 per barrel overall in 2026.
According to its December short term energy outlook (STEO), which was released on December 9, the U.S. Energy Information Administration (EIA) sees the Brent spot price averaging $68.91 per barrel this year and $55.08 per barrel next year. In its previous STEO, which was released in November, the EIA projected that the Brent spot price would average $68.76 per barrel in 2025 and $54.92 per barrel in 2026.
To contact the author, email andreas.exarheas@rigzone.com
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