Concern over oil market oversupply fears might be exaggerated

In a note last week from Standard Chartered analysts at the bank said oil market sentiment, especially among speculative traders, is highly bearish, similar to levels seen in 2008 during the Global Financial Crisis.

Concerns centre on

• expectations of macroeconomic hard landings,
• weak oil demand,
• fears of oversupply in 2025

Stan Chart say that the concern over oversupply fears might be exaggerated due to unclear supply data.

• There is a notable difference between the demand growth estimates of the International Energy Agency (IEA) and OPEC Secretariat. The IEA estimates higher OPEC+ oil output compared to the U.S. Energy Information Administration (EIA).
• the differences in supply estimates are critical, as the IEA’s 2025 oversupply forecast could be based on “ghost” barrels, contributing to bearish sentiment and lower prices in 2024.

More:

• Russia, Iraq, and Kazakhstan have submitted plans to compensate for overproduction, with full compensation expected by September 2025
• oil traders are reacting to short-term geopolitical news but not pricing in potential long-term changes, particularly regarding Iran. Oil prices are expected to rise once short-term issues settle.

Earlier:

• About that forecast for $25 oil …

This article was written by Eamonn Sheridan at www.forexlive.com.