StanChart Finally Turns Bearish, Cuts Oil Price Forecast By $15/bbl

Core Viewpoint - Standard Chartered has shifted from a bullish to a bearish outlook on oil prices, cutting its 2026 and 2027 price forecasts by $15 per barrel due to significant changes in the forward curve [2] Group 1: Oil Price Outlook - The average price of Brent crude for 2025 has been raised to $68.50 per barrel from $61 per barrel, while the 2026 target has been reduced to $63.50 per barrel from $78 per barrel, and the 2027 price has been cut to $67 per barrel from $83 per barrel [2] - The futures curve is now in contango from early 2026 onwards, indicating expectations of rising prices or high storage costs [2] - Near-term weakness is anticipated due to negative sentiment driven by trade war uncertainties and oversupply fears, but a gradual increase in prices is expected in the long term [2] Group 2: U.S. Oil Production Dynamics - U.S. oil output has reached an all-time high of 13.58 million barrels per day in June, with production increasing by 133,000 barrels per day [1] - Analysts predict that U.S. shale output growth will be depressed by low prices, and if OPEC+ maintains its production levels, this could highlight tightness in the market [2] - Rising production costs in the U.S. shale sector are driven by resource depletion and the need to drill in more complex areas, with marginal costs expected to rise from approximately $70 per barrel to $95 per barrel by the mid-2030s [3] Group 3: Economic Influences - The weakening global economic outlook is likely to lead to economic stimulus measures, including potential rate cuts in the U.S. and a response package from China [1] - Many U.S. oil producers require prices above $65 per barrel to profit from new drilling, a threshold that is increasing due to inflation [3]