UBS Analysts: Oil Market Fundamentals Remain Bearish Despite Geopolitical Risks
The latest analysis from UBS indicates that the oil market fundamentals are still leaning towards the bearish side, despite ongoing geopolitical risks. While tensions in the Middle East initially sparked concerns about potential supply disruptions, direct risks have subsided. This, combined with softer global demand, particularly from China, has kept prices on a downward trend.
UBS forecasts a balanced market for 2025, assuming no changes to the OPEC+ production cuts. One of the key factors contributing to this bearish outlook is the weaker-than-expected demand from China, a major player in global oil consumption. UBS has lowered its 2024 global demand growth forecast and anticipates only a marginal improvement for 2025.
On the supply side, the outlook is mixed. Non-OPEC+ countries, especially the United States, are expected to maintain strong production levels. However, US production is facing challenges due to stagnant rig activity, leading UBS to revise down its output forecast. OPEC+ production cuts are in place, but compliance varies among members.
Overall, UBS does not expect OPEC+ supply to return to the market until at least 2027, as weak demand and non-OPEC+ supply growth continue to offset any potential increases. This analysis highlights the ongoing bearish trend in the oil market and the factors shaping its future. Investors and consumers should stay informed about these developments to make informed decisions about their finances.