Lower crude oil yields may support higher prices in 2025 Via Investing.com
Investing.com – Lower crude oil production sets the stage for a potential price hike in 2025, according to the latest note from Wells Fargo (NYSE:).
Despite the weak performance this year, the bank said rates may rise again as global supply remains tight and economic conditions improve.
Wells Fargo points out that while crude oil prices saw little change in 2024—down just 2% from the start of the year—this was largely due to “numerous uncertainties around global demand growth and sluggish economic conditions” that kept prices low. pressure.
However, tight supply conditions mean that crude oil inventories remain low, which, historically, has supported price increases.
The bank explains, “When global inventory is low or declining, oil prices tend to rise. Wells Fargo points out that this downward trend in inventories has been evident in recent months, suggesting that oil prices could rise quickly in response.
Looking ahead, Wells Fargo projects that improved macroeconomic conditions and increased demand growth in regions such as China may drive oil prices higher.
“China’s efforts to stabilize its infrastructure sector could lead to better growth in demand for commodities and oil,” the note said. As demand increases globally, Wells Fargo expects crude oil prices to respond accordingly.
By 2025, the bank predicts that West Texas Intermediate (WTI) will reach $85–$95 per barrel and move from $90 to $100 per barrel.
With these expectations, Wells Fargo remains in favor of the Energy sector within assets, expecting that lower inventories combined with the recovery of the global economy will support a positive outlook for crude oil prices next year.
