Bank of America Predicts Crude Oil Could Dip Below $50

Oil prices continued to decline on Wednesday, driven by increased supply from OPEC+ and escalating trade tensions between the United States and China. Bank of America has issued a warning that Brent crude could fall below $50 per barrel in the coming months. As of 1:13 p.m. ET on Wednesday, West Texas Intermediate (WTI) was priced at $58.55, while Brent crude stood at $62.14. This downturn has resulted in both benchmarks experiencing a decrease of approximately 5-6% since October began, marking their lowest prices in five months.

The recent price movements have erased much of the gains seen in late summer. Additionally, natural gas prices have also experienced a decline, settling at $2.989 per MMBtu, a result of mild weather and stable production levels.

Supply Concerns and Trade Tensions

According to a report by Reuters, analysts at Bank of America cited increasing supply from OPEC+ members, especially from Saudi Arabia, Iraq, and the United Arab Emirates, as a factor contributing to a “persistent surplus.” This surplus could potentially elevate inventories to levels not seen since 2020. The bank emphasized that Brent prices could drop below $50 if demand from China continues to weaken or if the United States escalates tariffs against Chinese imports.

The warning comes in light of President Donald Trump‘s renewed threats of a “massive tariff expansion” on Chinese goods, which he claims are due to “unfair energy and technology practices.” This announcement has already unsettled global markets, which are grappling with weak industrial data from China and a strengthening U.S. dollar.

Traders are approaching the upcoming OPEC+ meeting, scheduled for next month, with caution. Delegates are expected to discuss the speed of their output unwinding plan. Some Gulf producers have ramped up exports by nearly 400,000 barrels per day since September, while Russia has maintained output above 9.3 million bpd despite technical constraints.

Global Supply and Demand Outlook

In its October Oil Market Report, the International Energy Agency (IEA) has revised its demand growth projections to approximately 700,000 barrels per day for both 2025 and 2026, while also increasing supply expectations. The IEA cautioned of a larger-than-anticipated surplus in the market. Global observed inventories surged by 17.7 million barrels in August, reaching a four-year high of 7.909 billion barrels. Furthermore, the volume of “oil on water” increased by 102 million barrels in September due to heightened exports from the Middle East and the Americas.

As the market navigates these complex dynamics, the implications for both producers and consumers remain significant. The balance of supply and demand will likely continue to influence oil prices in the near future, making the upcoming OPEC+ discussions crucial for the industry.