Although the market for crude oil is now constrained, Morgan Stanley stated that there would probably be an excess of supply next year when Brent prices drop into the mid-to-high $70s area.

According to a report from the bank dated Friday, equilibrium will be restored by the fourth quarter, “when seasonal demand tailwinds abate and both OPEC and non-OPEC supply return to growth.” The bank predicted that the tightness will last for the most of the third quarter.

At a mini-ministerial meeting next month, OPEC+ is unlikely to advocate modifying the group’s output strategy, according to three sources who spoke with Reuters last week. Instead, a plan to begin undoing one layer of oil output restrictions from October will likely remain in place.

According to Morgan Stanley, supply growth from both OPEC and non-OPEC sources is expected to exceed demand growth by around 2.5 million barrels per day (bpd) by 2025.

Refinery runs are predicted to peak in August of this year and are not expected to drop below that point until July of 2025.

Morgan Stanley maintained its $86 per barrel projection for Brent oil prices in the third quarter of 2024. Goldman Sachs also kept its quarterly forecast earlier this month, based on an average Brent price of $86 per barrel.

By 05:35 GMT on Monday, the price of a barrel of Brent oil had increased by 0.54%, while the price of U.S. West Texas Intermediate crude futures had increased by 0.54%, to $80.56.

(Adapted from MSN.com)