Wall Street's pessimistic expectations for the oil market in 2025 have begun to show cracks, as institutions like Macquarie indicate that weak production growth and tightening supply balance have called into question the pessimistic forecasts for next year.

In a report to clients, Macquarie Analysts led by Vikas Dwivedi stated that as 2024 comes to a close, crude oil inventories have only seen minor increases, while earlier this year there were predictions of a "significant increase." On the supply side, Macquarie expects OPEC+ will not restore production, and US production will not see a substantial increase.

Few traders are willing to short Brent crude oil at $70 per barrel, as this price is supported by both fundamentals and technicals. Macquarie still anticipates an oversupply next year, but stated that if the price fails to drop below $70, "then the bearish argument will need to be reassessed."

Prior to Macquarie, Morgan Stanley raised its crude oil price expectations, while other Banks warned that concerns over oversupply are excessive.