Mystery surrounds the forecast of crude oil prices amid oversupply and weak demand

Recent movements in crude oil prices have been volatile and unstable, resulting from the convergence of multiple factors on both supply and demand sides, in addition to geopolitical pressures and increasing inventories. As with most commodities, crude oil price forecasts are subject to fundamental market forces: supply and demand. Despite the sharp decline recently, the latest movements raise questions about the expected price trajectory in the coming periods.

Supply and Demand Balance: Who Controls the Price?

Supply and demand are the primary drivers of crude oil price expectations. When oil discoveries increase or extraction accelerates, supply rises. Conversely, disruptions from geopolitical tensions or sanctions on global supply chains cause supply to decrease.

On the other hand, demand mainly comes from industrial and commercial activities. Therefore, economic growth levels in major industrial countries like the US, China, and the European Union directly impact global demand volume.

A new factor is beginning to pressure demand: the growing use of clean and renewable energy. As green energy spreads across industrial and transportation sectors, the need for oil has decreased, negatively impacting price expectations.

Supply Side: What’s Happening Currently?

Increases from OPEC+ and other countries

OPEC and its allies announced an increase in production by 137 thousand barrels per day starting November. Meanwhile, the International Energy Agency (IEA) forecasted that global supply will reach 106.1 million barrels per day in 2025, an increase of 3 million barrels per day over previous estimates.

Non-OPEC countries are expected to contribute an additional 2 million barrels per day. The US recorded a record production of 13.6 million barrels per day in July 2025.

Inventories rise to unprecedented levels

Global inventories, especially “floating oil,” saw a significant increase in September 2025. This increase reflects shipments awaiting sale or distribution, indicating that supply exceeds current demand.

Factors limiting supply

Despite increases, some pressures mitigate this: sanctions on Russia and Iran, attacks on Russian infrastructure, and some OPEC+ countries nearing their maximum capacity. However, easing regional tensions could open the way for easier oil shipments.

Demand Side: Global Appetite Declines

Demand growth is below expectations

The IEA lowered its forecast for oil demand growth in 2025 to 710 thousand barrels per day, a figure below historical growth rates. The problem: this growth is insufficient to absorb the increases in supply.

Differences in country consumption

Demand is expected to grow in developing countries by 1.2 million barrels per day, while it declines in OECD industrial countries by 0.1 million barrels per day. This disparity reflects weak demand from the largest industrial economies.

China: The sluggish demand driver

The Chinese economy has been experiencing continuous slowdown since 2022. The economic growth rate has not exceeded 5.4% since October 2023, and in Q3 2025, it decreased to 4.8%.

Additional indicators confirm weakness:

• Retail sales dropped from 6.4% in May to 3% in September
• Consumer Price Index (CPI) recorded deflation at -0.3%
• Producer Price Index (PPI) contracted by -2.3%
• Manufacturing Purchasing Managers’ Index (PMI) remained at 49.7 points (below 50 indicating contraction)

Trade war and US interest rates

The US Federal Reserve has lowered interest rates to 4.25% currently, with expectations of further cuts. This typically stimulates demand, but the escalating trade war between the US and China has negated much of this positive effect.

Recently, the US halted imposing 100% tariffs on China in exchange for Chinese commitments to buy US soybeans. This pushed oil prices up by 7.1% last week, from 61.25 to 65.68 dollars. However, traders remain cautious: the US previously suspended tariffs and then reinstated them, keeping the oil market in ongoing uncertainty.

Forecasts: An Incoming Supply Surplus

Combining supply and demand data, the IEA forecasted a supply surplus of up to 4 million barrels per day in 2026, a high figure.

Based on this, Brent crude oil price expectations are:

• $62 on average in Q4 2025
• $52 in 2026 (if the surplus persists)

However, OPEC anticipates a balance between supply and demand in 2025 and 2026, with demand growth of 1.38 million barrels per day in 2026.

Major financial institutions’ forecasts:

• J.P. Morgan: $66 per barrel by the end of 2025
• Morgan Stanley: $60 per barrel by the end of 2025

Technical Analysis: Where Is the Price Heading?

Brent crude currently stabilizes at $65.44. The overall trend remains bearish in the medium term, but some technical signals suggest a short-term correction.

Clear downward channel movement: the price has been moving within a downtrend channel since Q3 2024, with selling pressures dominating the market.

Key technical indicators:

• Price rebounded from strong support at $59.9
• Bollinger Bands indicate a break above the middle band
• MACD shows a positive crossover, possibly signaling upward momentum
• Major resistance at $70.8 (the dividing line between the downtrend and potential bullish reversal)

Expected scenarios:

If Brent successfully breaks and holds above $70.8:

• Target $73.6 by the end of 2025
• Then $74.9 in early 2026

If the correction fails and it drops below $59.8:

• Possible move toward $61.1 by the end of 2025
• Then $58.5 in early 2026

How to Invest Based on Crude Oil Price Expectations?

Unlike gold and some other commodities, physical oil cannot be purchased due to storage and logistics complexities.

Traders invest in oil through:

1. Futures Contracts: Buying with the intention to sell before delivery date

2. CFD (Contract for Difference): (CFD) is the easiest and most flexible option for individual traders. It requires less capital and offers high profit opportunities, but also involves high risks. Choosing a reliable and secure trading platform that provides good analytical tools is essential for success with this strategy.

Summary

Crude oil price forecasts are currently uncertain. On one hand, there is a growing surplus and weak demand, especially from major industrial economies. On the other hand, geopolitical factors and trade agreements could alter the equation.

On the technical level, the price is undergoing a correction within a primary downtrend. The critical level is $70.8: if Brent breaks above it steadily, a genuine bullish reversal could occur. Remaining below this level confirms continued downward pressure.

Traders should monitor Chinese economic data and US trade developments, as they are now among the strongest market drivers.