Former "Bull Market Flag Bearer" Shifts Stance: Wall Street Turns Bearish on Crude Oil

Crude oil has endured its worst year since the pandemic, and Wall Street believes the sell-off is far from over.

Based on average forecasts from Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley, Brent crude futures are expected to slide further to around $59 by 2026, compared to current trading levels near $62 per barrel. The international benchmark has already declined by 17% this year.

These five banks project a global oil supply surplus of approximately 2.2 million barrels per day in 2025, as production outpaces demand growth.

Their surplus estimates are lower than those of the International Energy Agency (IEA), which anticipates a record oversupply of 4 million barrels per day—though it acknowledges that adjustments by oil-producing nations could narrow the gap.

The IEA's upcoming report is expected to provide further clarity on global supply prospects.

Kelvin Wong, senior market analyst at OANDA, noted: "The next market catalyst could be the IEA's December Oil Market Report on December 11, which is likely to reaffirm projections of a record surplus in 2026, as highlighted in previous outlooks."

He added that if the IEA continues to flag oversupply risks in its December report, crude prices may face further downward pressure.

Among these institutions, Goldman Sachs is the most bearish, forecasting an average price of $56 per barrel for 2025, while Citigroup remains the most bullish at $62. Notably, this marks a significant reversal from their traditional stances—Goldman Sachs was previously the most bullish, while Citigroup had been a vocal bear.

Goldman Sachs argues that delayed oil projects due to COVID-19 will gradually come online, adding fresh supply. Citigroup, however, believes continued stockpiling in Asia will mitigate the price impact of oversupply.

JPMorgan expects the actual surplus to be smaller than projected, as OPEC+—led by Saudi Arabia—will likely reverse course and implement deep production cuts by mid-2025, after having contributed to the glut.

Bank of America assumes that OPEC+ will resume output increases after a planned pause in Q1.