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OIL: Soft Fundamentals and OPEC+ Price War Risk Drive Short Oil Positions: BofA

OIL
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Near record speculative short oil positions have been driven by soft fundamentals and concerns of an OPEC+ price war, according to Bank of America.

  • Downside risk also from China oil demand, declining refining margins and slow fuel consumption after a post COVID rebound. Key upside risks are geopolitics, Fed interest rate cuts, and China stimulus.
  • Brent is forecast to average $80/bbl in 2024 and $75/bbl in 2025 with a soft price floor of $60/bbl for 2025 if downside risks play out.
  • The global oil balance is expected to move into a surplus of 730kb/d in 2025 amid slowing demand and with non-OPEC supply growth.  Global demand growth is estimated at 1mb/d in 2024 and 1.1mb/d in 2025.
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Near record speculative short oil positions have been driven by soft fundamentals and concerns of an OPEC+ price war, according to Bank of America.

  • Downside risk also from China oil demand, declining refining margins and slow fuel consumption after a post COVID rebound. Key upside risks are geopolitics, Fed interest rate cuts, and China stimulus.
  • Brent is forecast to average $80/bbl in 2024 and $75/bbl in 2025 with a soft price floor of $60/bbl for 2025 if downside risks play out.
  • The global oil balance is expected to move into a surplus of 730kb/d in 2025 amid slowing demand and with non-OPEC supply growth.  Global demand growth is estimated at 1mb/d in 2024 and 1.1mb/d in 2025.