By Anthony Harrup


A looming global oil surplus of around 800,000 barrels a day is likely to keep pressure on crude prices in 2025, with production growth set to outpace the increase in demand, Bank of America said Tuesday.

In its 2025 energy outlook, the bank sees Brent crude averaging $65 a barrel next year, down from around $80 so far this year. It sees U.S. benchmark West Texas Intermediate crude at $61 a barrel next year.

Bank of America expects oil demand to grow by 1.1 million barrels a day in 2025, and sees supply by producers outside of the Organization of Petroleum Exporting Countries and its allies rising by 1.4 million barrels a day while OPEC+ seeks to unwind output cuts.

Downside risks for prices include a global trade war or an OPEC+ price war, the bank said. "Upside risks to energy prices may come from Middle East and Russia/Ukraine tensions, US sanctions enforcement, or monetary/fiscal easing."

OPEC+, which includes major producers Saudi Arabia and Russia, has twice postponed plans to start unwinding voluntary output cuts, and on Thursday is widely expected to postpone production increases for at least another month to February.

"Many people inside OPEC+, many countries, do not want to keep cutting," Bank of America's head of commodity research Francisco Blanch said in presenting the outlook. "My sense is that patience is running a little thinner."

An eventual upswing in demand might be met by OPEC rushing in to fill the gap since they don't want to keep losing market share, Blanch said. "They obviously want to bring production back, they just don't want to collapse the market in the process," he added.

In the U.S., where production has hit a record 13.5 million barrels a day, a more oil-friendly administration of President-elect Donald Trump won't necessarily lead to much higher output, Bank of America said.

"The investor push towards increased capital discipline in recent years has forced companies to pay a lot more attention to profitability. So, U.S. energy production really depends mostly on price and profits, as opposed to government policy," the bank said.


Write to Anthony Harrup at anthony.harrup@wsj.com


(END) Dow Jones Newswires

12-03-24 1511ET