Oil market to face 'severe glut' and prices below $60 - Macquarie

Oil prices could fall below $60 a barrel in the coming quarters amid expectations of a "severe glut" in the market as production rises, Macquarie Group has warned. The financial group downgraded its price forecast and said that rebalancing the oil market will not only take time, but will require a combination of a number of factors.

Macquarie now forecasts that the average price of North American WTI crude oil will average around $57 per barrel in 2026 - versus the previously expected $60. Brent, which now costs about $66 a barrel, will trade at $57 in the first quarter of next year and $59 in the second quarter, according to Macquarie's forecast.

"We maintain a fundamentally bearish view on the energy sector," Bloomberg quoted Macquarie's quarterly crude market review as saying. Due to rising oil supplies from OPEC+, as well as from producers outside the cartel, Macquarie's baseline scenario expects a significant surplus in the remaining months of this year and the first quarter of next year.

Saudi Arabia is yet to show signs of easing its policy of increasing oil supply, and in the absence of such a reversal, low prices will persist for a long time, Macquarie warned. "It will take a combination of lower prices (which will slow non-OPEC supply growth), supply disruptions, OPEC policy changes and time (for demand to absorb excess supply) to rebalance the market," the financial group said.

Macquarie expects a global oil surplus of 4.63 million bpd in January-March 2026, with a decline in the next three quarters. Meanwhile, in September, the International Energy Agency (IEA) predicted that in 2026, global oil supply will exceed demand by an average of 3.33 million bpd, a record annual imbalance.

The benchmark Brent crude oil grade has fallen in price for the third month in a row as OPEC+ rapidly eases production curbs in a bid to regain market share. Representatives of the cartel's member countries are due to meet next weekend to decide on production levels for November. One delegate told Bloomberg that on the agenda is the possibility of an accelerated supply increase of 500,000 barrels a day over three months. However, OPEC itself said there are no such plans.

This article was AI-translated and verified by a human editor