In a new report released on Wednesday, Citi analysts depicted a bleak picture of the oil market. They predict that Brent crude oil prices will fall to $60 a barrel in a year. Citi expects that even if OPEC and its allies extend production cuts until the end of next year, the global oil balance will enter a "clear surplus," and if OPEC cancels some production cuts according to its recent plan, the bank expects a "very large surplus."

Citigroup's forecast for oil prices is lower than all peers: it predicts that Brent crude oil prices will fall to $74 per barrel in the fourth quarter; it predicts that at the beginning of 2025, prices will fall to $65 per barrel, and in the second and third quarters to $60 per barrel, and will drop to $55 per barrel by the end of next year; it predicts that WTI crude oil prices will fall by about $4 per barrel. The bank believes that copper is the most worth holding commodity in 2024-25, and expects prices to soar to $12,000 per tonne next year, and recommends that investors go long on copper while shorting crude oil.

Bearish signal has appeared in crude oil fundamentals. The bank believes that copper is the most worth holding commodity in 2024-25, and expects prices to soar to $12,000 per tonne next year, and recommends that investors go long on copper while shorting crude oil.

Bearish signal has appeared in crude oil fundamentals.

Despite the unexpected increase in US crude oil inventories by 3.7 million barrels as of June 7 (the market expected a 1.02 million barrel decrease), and the International Energy Agency (IEA) predicting that by the end of this decade, oil supply will experience a "staggering" surplus, international oil futures prices rose on Wednesday. WTI near-month crude oil futures rose 0.7% to $78.50 per barrel, and near-month Brent crude oil futures rose 0.8% to $82.60 per barrel. This is the fifth time in the past six trading days that both benchmark crude oil futures prices have risen.

The IEA monthly report lowered its forecast for demand growth in 2024-25 by 100,000 barrels per day to 960,000 barrels per day, and expects that oil demand will increase by 1 million barrels per day in 2025, given the economic weakness and the deployment of clean energy technologies. With the advancement of energy transformation, global oil demand is expected to slow down in the next few years, and oil demand growth is expected to peak in 2029, with a "severe excess" by 2030. By the end of this decade, global oil demand is expected to stabilize at about 106 million barrels per day, while total supply capacity may rise to nearly 114 million barrels per day, resulting in an excess of 8 million barrels per day in global supply and demand.

The IEA warns that "this will result in an unprecedented level of idle production capacity, except for the peak period of blockade in 2020. Such a massive oil production buffer may bring about a lower oil price environment and bring severe challenges to US shale oil producers and OPEC+."

At the same time, US crude oil inventories unexpectedly increased by 3.7 million barrels last week to 459.7 million barrels, higher than the expected decline of 1.2 million barrels; US domestic gasoline inventories increased more than expected, up 2.6 million barrels to 233.5 million barrels. At the same time, the Federal Reserve kept interest rates unchanged but only expects one interest rate cut this year. However, crude oil prices were supported by weaker-than-expected US May inflation data.

Some still maintain a bullish view, with Goldman Sachs leading the way.

Despite this, due to the energy demand during travel peak season and hot summers, global oil prices are expected to rise again this summer. Several Wall Street banks have expressed bullish views on oil prices in the recent downturn. For example, Daan Struyven, head of oil research at Goldman Sachs, predicted in the latest report released on Sunday that Brent crude oil prices will rise to $86 per barrel in the third quarter of this year, an increase of nearly 7% from the current level. Struyven and his team predicted that Brent oil prices in the third quarter are expected to rise to $86 per barrel, and they insist on the fluctuation range forecast of $75 to $90 per barrel.

Goldman Sachs believes that due to the demand for summer transportation and air conditioning, there will be a significant supply shortage of 1.3 million barrels per day in the oil market. If a stable oil market is required, OPEC+ can delay, suspend, or cancel its production increase decision. Looking ahead to the whole year, Goldman Sachs believes that due to lower prices promoting demand, the downside limit of Brent crude oil prices is $75, and the upside limit of Brent crude oil prices is $90 due to higher-than-expected global inventories and OPEC+ production decisions.

According to reports, BOK Financial analyst Dennis Kissler said that the IEA's comments on slowing oil demand growth and a surge in supply on Wednesday were unfavorable to oil prices, but "most traders are reserved about this, because global refining demand is still very strong, and the boom in electric vehicle growth seems to be slowing down."

In addition, according to UBS's analysis, related long positions are at the lowest level since 2011, while short positions are close to historical highs. Giovanni Staunovo, an analyst at UBS, said: "We think this is too pessimistic. Inventories should begin to decline in the coming weeks, and demand is expected to increase by 2-2.5 million barrels per day by August."

In addition, Bank of America's well-known analyst Hartnett also said that oil is the best hedge against geopolitical risks before the US election. Currently, the risk premium for crude oil is zero, and the price of oil is cheaper than that of copper and gold. When geopolitical risks occur, oil is usually the winner in terms of assets. The recent sharp drop in oil prices is strange, as we are currently in a loose cycle.