Right on the button: Kpler’s 2024 oil forecast does it again

A little less than a year ago, a research update filled with pride lauded Kpler as having the best crude price forecast of 2023 amongst all commodity-focused analytical outlets. Analysing the accuracy of our assumptions in a separate analytical piece, we have set the bar exceptionally high, also challenging ourselves to maintain this tradition in the upcoming years. Were we to overshoot our 2024 outlook, the pressure of reputational damage would be all over the place, with our esteemed readers poised to casually recollecting Aristotle’s remark that ‘one swallow does not a summer make’. Luckily, for the second straight year our pricing forecast has surpassed all expectations and is at the very top of Brent prognostications in 2024.

As we’ve highlighted a year ago, becoming the top crude oil forecaster of 2024 would be a Herculean task as the vast discrepancy of outlooks in 2022 and 2023 gave way to a much more consolidated landscape into this year. Taking oil price forecasts from December 2023-January 2024 as the basis for comparison, the most bearish of mainstream forecasts from Citi ($74/bbl for the annual average) was only $16/bbl away from the most bullish outlook from Bank of America ($90/bbl). Harking back to the JBC Energy days, Kpler has been historically focusing on Dated Brent prices, which arguably should reflect supply/demand fundamentals more directly than the non-physically deliverable ICE Brent futures contract. Our prediction for the 2024 Dated Brent annual average stood at $81.1/bbl. Fascinatingly, our forecast (as published in our usual monthly selection of pricing forecasts on 5 January 2024) was only $0.45/bbl off, as Dated averaged $80.65/bbl over the course of last year.

In a landscape packed with nuanced and elaborate analysis, our pricing forecast coexisted with great predictions made by our formidable colleagues and peers. Goldman Sachs predicted $81/bbl for ICE Brent and one might argue that it was only due to wider-than-usual spreads between ICE Brent and Dated Brent that their forecast wasn’t the single best prognostication out there. For reference, the annual average of front-month ICE Brent futures in 2024 came in at $79.86/bbl, with the $1/bbl of difference between forecast and reality attesting to the great analytical work done by Daan Struyven and the team. Similarly, the US Energy Information Administration can take due credit for its 2024 forecasts thanks to its astute ICE Brent call of $82/bbl, further solidifying the EIA’s reputation as (arguably) the most objective government-backed analytical agency out there.  

Leading commodity research units' 2024 Brent forecasts, $/bbl.

Source: Data aggregated by Kpler, please note that most forecasters predict ICE Brent futures whilst we historically predict Dated Brent prices.

Zooming in to reflect on the main stories that shaped crude oil markets in 2024, the ever-shifting sands of macroeconomy surprised most industry watchers, ourselves included. Back in January 2024, we predicted that H2 would outperform the first half of the year largely due to an improving macroeconomic situation, however our expectation of US formally entering recession in Q2 did not materialize up until the very present moment. Moreover, the finetuning of OPEC+ policy provided bullish momentum for oil prices in H1 2024, even if the market took time to digest these changes. To take but one example, Russia switching from ephemeral export-cutting commitments to the same production cuts that Saudi Arabia or the United Arab Emirates had in place tightened medium sour supply even more than before, concurrently marking the emergence of the ‘Great Eight’ of OPEC+.

Kpler m/m Dated Brent forecast vs factual Dated, $/bbl.

Source: Kpler.

Looking at the balances of 2024, with the obvious caveat that November-December numbers are still prone to undergo changes as we reflect on government statistics, we see the following. The anticipated inventory builds of the spring months weren’t as harsh as believed, whilst the tightness of the summer months was less pronounced than in previous years. To explain this, we need to look on the impact of China’s remarkably fluid refinery maintenance works across the year, seeking to avoid high-impact turnarounds and rather stretching them out across April-July, as well as on Ukraine’s drone warfare on Russia which upended the modus operandi in the Black Sea and Mediterranean regions. Moreover, the looming oversaturation of downstream capacity amidst declining rates of global demand growth has already started to eat its way into balances. For instance, in Europe refining margins for simple-setup refiners were negative on 68 days last year (compared to 35 days in 2023) whilst in Asia the same metric went up from 42 days in 2023 to 58 days in 2024. The downstream pressure will continue to weigh on refining economics, just as oversupply coming from non-OPEC countries (often delayed from 2024 as is the case of Brazil's pre-salt bonanza this year) adds a further layer of downside risks.

Predicted (basis 12/2023) and factual 2024 crude balances vs Dated Brent prices, kbd and $/bbl.

Source: Kpler.

For 2025, we anticipate a tangibly lower pricing environment, with the annual average shedding almost $10/bbl y/y and reaching $71.6/bbl. Pricing should be notably more rangebound than in previous years, with our monthly averages ranging from $68.6/bbl in December to $75.1/bbl in January. The key interplay to look out for will be between Donald Trump’s measures in his first 100 days in office – almost guaranteed to ratchet up pressure on Iran – and subdued demand growth as the rare remaining China bulls get disappointed once again with limited oil consumption growth in the Middle Kingdom. The second half of 2025 will see Asian demand moving up a gear all the while non-OPEC supply growth accelerates in unison, with Guyana, Brazil and Canada all adding incremental capacity. Whilst media have paid a lot of attention to the IEA’s oft-repeated mantra of a global oil demand peak being just around the corner, we anticipate two other peaks coming up next year.

The peaking of US shale by Q4 2025 will foreshadow the end of massive non-OPEC y/y increases, with Brazil, Guyana and subsequently Namibia becoming the main increments in global supply further down the road in 2026-2027. We expect December 2025 to see the highest US monthly production figure on record, at 13.72 Mbd, and even though quarterly averages would be the highest in Q2 2026 (13.66 Mbd), output rates would never be as high across the US. Counterbalancing the end of booming US shale growth, China will see its diesel demand hit the definitive ceiling next year at 4.47 Mbd, following which it would start its gradual decline. Seeing gasoline slow down to almost non-existent annual increments as well, 2025 will foreshadow the peak of Chinese transportation fuel demand. As we have argued repeatedly, there is still growth in the light distillates, particularly in naphtha and LPG that in outright terms will drive demand growth in 2025-2026 across China. But that would be a different China than what we have gotten accustomed to.

Overall, global stocks are poised to build, with us predicting a 160 kbd rate of inventory increases for the year (-90 kbd in the outgoing year), particularly concentrated in the March-May period, which should feel the weakest in terms of supply/demand fundamentals. The varying extent of doom and gloom in 2025 has dispersed Brent pricing forecasts as well, with Morgan Stanley going for the more bearish $69/bbl in 2025 whilst Goldman Sachs expects the global benchmark to average $76/bbl this year. In a year’s time, we shall see whether Kpler could complete the forecaster’s ultimate hat-trick or perhaps there would be a new undisputed champion.
‍

Want market insights you can actually trust?
‍

Kpler delivers unbiased, expert-driven intelligence that helps you stay ahead of supply, demand, and market shifts. Our precise forecasting empowers smarter trading and risk management decisions - backed by the most accurate oil price predictions two years running.

Unbiased. Precise. Essential.

Trade smarter. Request access to Kpler today.