Oil Market Sentiment Improves as Excess Supply Concerns Ease, According to Macquarie

In a recent note, Macquarie observed a shift in the oil market's perception of balance for 2025, indicating a less pessimistic outlook. This change in sentiment is attributed to smaller-than-expected stock builds and downwardly revised expectations for U.S. supply growth in the fourth quarter of 2024. Despite these factors, the market has not seen sustainable price rallies due to a consensus still forecasting significant surpluses for 2025. Macquarie's analysis suggests that if Brent crude prices remain above $70 per barrel until the second quarter of 2025, there may be a necessity to reassess the current pessimistic thesis, with $70 considered a key support level.

Last week, Brent crude experienced an increase of approximately $3 per barrel due to rising risks of sanctions on Russia, political developments in the Syrian Arab Republic, China's economic stimulus measures, and potential short-term tightness. However, uncertainty regarding the duration and impact of these factors, coupled with expected heavy surpluses in 2025, has tempered upward momentum.