(Bloomberg) -- Oil’s collapse to the lowest level in more than two years is the market’s indication that there’s no need for extra OPEC+ supplies, Citigroup Inc. said.
Global benchmark Brent crude on Tuesday fell below $70 a barrel for the first time since December 2021, though prices recovered back above that level Wednesday.
The Organization of Petroleum Exporting Countries and its allies recently postponed planned supply additions for the fourth quarter by two months. Citi says the group will likely need to cut production next year if it wants to balance the market in the face of bumper supply additions from outside the grouping.
“I would say the market is trying to send a strong signal to OPEC that there’s no room for any more barrels,” the bank’s head of commodities research, Max Layton, said in a Bloomberg TV interview. “Our balances suggest that OPEC needs to cut a whole extra million barrels for the entirety of 2025 to balance this market.”
Traders have become “consensus bearish” on the outlook for next year at the moment, he added.
--With assistance from John Deane.
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