Morgan Stanley predicts a shift in the currently tight crude oil market toward a surplus next year, anticipating a decline in Brent crude prices to $75-$79 per barrel.

According to a note issued by the bank, while supply shortages are expected to persist through most of the third quarter, rebalancing is anticipated in the final quarter. This shift is attributed to a projected decline in seasonally favorable demand conditions and increased supply from both OPEC and non-OPEC producers.

Sources speaking to Reuters indicated that OPEC+ is unlikely to alter its production policy at its upcoming meeting, suggesting a continuation of the current production cut plan until October.

Morgan Stanley forecasts a surge in supply from OPEC and other producers, reaching an estimated 2.5 million barrels per day by 2025. This surge is projected to significantly outpace anticipated demand growth.

Regarding refinery utilization rates, the bank predicts a peak in August, with a return to similar levels not expected before July 2025. Despite the projected surplus, Morgan Stanley maintains its forecast for Brent crude prices to average $86 per barrel throughout the third quarter of 2024.