Citi analysts predict a drop in oil prices, with a forecast of $60 per barrel in 2025. This represents a potential decline of over 20% compared to current market expectations.
"Our 0-3 mth forecast for Brent is $82/bbl before prices head lower during 4Q and into 2025 when we expect them to settle at $60/bb," states the Citi note.
In the near term, however, Citi anticipates some volatility, with potential upside risks due to seasonal factors and ongoing geopolitical tensions.
The bearish outlook for oil stems from an expected surplus in the global market by 2025, even with production cuts from OPEC+. Citi analysts recommend that oil producers "hedge" against potential price drops and that investors view any short-term price increases as an opportunity to take bearish positions.
Conversely, Citi is bullish on copper, anticipating a price increase to $12,000 per tonne by 2025. This optimistic forecast for copper is driven by factors such as below-trend mine supply growth and rising demand, particularly from China's accelerating energy transition.
The report highlights a significant difference in volatility between the two commodities, with Citi recommending investors take advantage of this disparity. They project the copper-to-oil price ratio to reach 200 by 2025, compared to the current level of around 130.