Bank of America expects average crude oil contract prices to fall from current levels in the second half of the year, citing a combination of higher production from OPEC and its allies, increased global refining capacity and a slowdown in Chinese imports.
In its latest energy note released Thursday, the bank said Brent oil prices remained relatively resilient this year despite ongoing global trade conflicts and OPEC+ production hikes, averaging $70.75/bbl since January.
BofA attributed oil's strength so far this year to increased global travel, a pickup in trade amid uncertain U.S. tariff policy and a resilient Chinese economic outlook.
More importantly, the bank cited increased Chinese buying, estimating roughly all the global oil surplus during the second quarter ended up in Chinese strategic stockpiles. Higher imports by China also helped absorb the increased world oil supply since OPEC+ began to unwind production cuts of 2.2 million b/d in April.
The oil market could look "very different" heading into fall, however, as OPEC+ continues its higher production and more refining capacity comes online, which should reduce petroleum product cracks into the autumn, the bank said.
BofA said it still expects the Brent price to average $64/bbl in H2. On Friday morning, London-based September Brent prices traded at around $70/bbl, which was well below their 2025 high at above $80/bbl set in January.
Still, very low global oil inventory excluding that of China should keep oil prices supported, the U.S. bank said. In addition, total commercial petroleum stocks including crude oil and refined products across developed markets are well below seasonal norms, which should underpin oil prices, BofA said.
On Friday, the International Energy Agency said in its monthly forecast that global oil supply should sharply outpace demand this year, while seasonal factors should keep markets tight in the short term. IEA expects oil supply to grow by 2.1 million b/d this year and 1.3 million b/d in 2026, above the agency's earlier estimates of 1.8 million b/d and 1.1 million b/d, respectively.
On Thursday, OPEC said in its annual report on long-term energy trends that it expects global oil demand to reach 113.3 million b/d in 2030 and nearly 123 million b/d in 2050, up from 103.7 million b/d in 2024, however.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Frank Tang, ftang@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com
(END) Dow Jones Newswires
July 11, 2025 12:42 ET (16:42 GMT)
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