Oil News: Inventory Builds Signal Bearish Oil Outlook for Brent and WTI

Brent vs. WTI Crude Oil Forecast for 2025

Brent and WTI crude oil prices are set for a challenging year in 2025 as analysts project a surplus in supply driven by non-OPEC+ production growth. Brent crude currently trades around $74.68 per barrel, while WTI sits near $71.72. Both benchmarks reflect restrained bullish sentiment in the short term, but market fundamentals suggest headwinds may intensify as the year progresses.

Global Supply Growth to Outpace Demand

The majority of production growth in 2025 is expected to come from non-OPEC+ countries, with U.S. shale, Brazil, and Guyana leading the charge. Global oil production is forecast to rise by 1.6 million barrels per day (b/d), with nearly 90% of that increase originating from outside the OPEC+ bloc. In contrast, global demand is projected to grow by just 1.1 million b/d, driven by modest increases in Asia, particularly India and China. This imbalance leaves room for surplus, putting downward pressure on crude prices throughout the year.

OPEC+ announced on December 5 that it would extend production cuts of 2.2 million b/d until April 2025. Despite this, rising non-OPEC+ output could tip the market into surplus as early as Q2 2025. The International Energy Agency (IEA) estimates that even if OPEC+ maintains current cuts through 2025, supply will still exceed demand by 950,000 b/d. Should cuts ease, the surplus could expand to 1.4 million b/d, further weighing on prices.

Inventory Builds and Price Pressures

Global oil inventories are forecast to remain near current levels through 2025. Ongoing OPEC+ cuts are expected to drive withdrawals of 0.7 million b/d in Q1 2025. However, as production ramps up later in the year, inventories are projected to grow by 0.1 million b/d on average in the second half. This increase will likely place downward pressure on prices, with Brent forecast to average $74 per barrel over the year, slipping to $72 per barrel by Q4 2025.

In the United States, crude oil net imports are expected to decline by more than 20%, reaching 1.9 million b/d – the lowest level since 1971. This drop reflects increasing domestic production outpacing refining needs. WTI prices may lag behind Brent as rising U.S. supply leads to localized surpluses.

Geopolitical Risks and Trade Tensions

While market fundamentals point to a bearish outlook, geopolitical risks and trade tensions remain wild cards. The Middle East conflict and potential U.S.-China tariff escalations could inject volatility into prices. Additionally, stricter U.S. sanctions on Iran or disruptions in the Russia-Ukraine war could temporarily lift crude prices. However, analysts expect any upward pressure from geopolitical events to be short-lived, as ample supply cushions the market.

Market Forecast

The outlook for 2025 remains cautiously bearish for both Brent and WTI. Brent is projected to average $74 per barrel, with prices potentially testing $78 if geopolitical risks intensify. WTI is forecast to hover between $68 and $73, with resistance at $72.36. Traders should anticipate a widening price spread of $4-$6 per barrel, reflecting stronger global demand for Brent compared to WTI’s regional oversupply. The oil market’s overall balance hinges on OPEC+ adherence to production cuts, though non-OPEC growth presents persistent downward pressure through the year.

More Information in our Economic Calendar.