"Is 'oil oversupply' inevitable? Demand for crude oil has been sluggish this year, and inventory continues to accumulate."

The latest research report released by the analysis team at JPMorgan Chase shows that global crude oil demand has been weaker than expected since the beginning of the year until early May, with inventories continuing to accumulate, indicating that the expected "over-supply" in 2025 to 2026 is persisting. Looking ahead to the oil demand prospects, Wall Street investment institutions such as Morgan Stanley, Goldman Sachs, and ING have expressed the view that the oil market in 2025 may experience an overall surplus. "The final data for global liquid fuel demand in the first quarter of 2025 is consistent with our forecast, showing a year-on-year increase of 1.6 million barrels per day," the JPMorgan Chase analysis team stated in the report. "Preliminary data for April shows consumption levels are essentially flat compared to last year, but 500,000 barrels per day below our expectations. This weakness appears to have continued into early May," they added. The report states that as of May 6, 2025, global crude oil demand averaged 103.5 million barrels per day, an increase of only 280,000 barrels per day compared to the same period last year, less than half of the increase of 550,000 barrels per day expected by JPMorgan Chase this month. "With the opening of the driving season in the Northern Hemisphere summer, we expect oil demand to improve in the coming weeks," the JPMorgan Chase analysis team said. The research report from the institution also pointed out that in the first week of May, visible commercial crude oil and refined petroleum inventories in OECD countries (including the US, Europe, and Singapore) decreased by 4 million barrels. Refined petroleum inventories such as gasoline and diesel declined by 6 million barrels, partially offset by an unexpected increase of 2 million barrels in crude oil inventories. "On a global scale, total liquid fuel inventories increased by 8 million barrels in the first week of May, with seven out of the past eight weeks showing an increase," the analysts wrote. "Visible refined petroleum inventories decreased by 3 million barrels, while crude oil inventories increased by 11 million barrels. The continued accumulation of crude oil inventories is mainly driven by a significant increase of 26 million barrels in Chinese crude oil inventories," they added. In another commodity report released by the JPMorgan Chase analysis team on April 30, they stated, "Global crude oil demand in April averaged 102 million barrels per day, essentially flat compared to last year, significantly deviating from the first quarter's 1.7 million barrels per day increase." "Our 'Annual Outlook' had predicted a growth of 500,000 barrels per day in April crude oil demand," they added. "The uncertainty in the global economic outlook is likely to cause stagnation in overall petroleum products growth, including crude oil and gasoline," the analysts noted. In that outlook report, the JPMorgan Chase analysts emphasized, "In the last week of April, visible commercial crude oil inventories in OECD countries (including the US, Europe, Japan, and Singapore) decreased by 280,000 barrels." They stated that crude oil inventories decreased by 8.4 million barrels, but were largely offset by an 8.1 million-barrel increase in refined petroleum inventories. Combined commercial total oil inventories in OECD countries, including crude oil and refined petroleum, increased by 5 million barrels. "Global total liquid fuel inventories increased by 17 million barrels in April, marking the third consecutive month of inventory growth," the analysts pointed out in their April 30 report. "However, the accumulation rate of crude oil and refined petroleum inventories has slowed from 44 million barrels in February and 33 million barrels in March," they added. "Visible refined petroleum inventories increased by 2 million barrels in April, marking the first monthly increase in 2025. Since the beginning of the year (until the end of April), global total liquid fuel inventories have increased by 62 million barrels, with crude oil inventories increasing by 102 million barrels significantly, while refined petroleum inventories decreased by 39 million barrels." "Over-supply" expected to persist from 2025 onwards Wall Street financial giant Goldman Sachs recently downgraded its expectations for international oil prices, primarily due to the continuing expectation of "over-supply" in the oil market this year and a much weaker growth in global crude oil demand than previously anticipated under the "tariff storm" led by the Trump administration. This is also why the international oil benchmark Brent crude futures price has nearly halved since April. The bank currently expects the average Brent crude oil price curve for the remainder of 2025 to be $60 per barrel, and the average WTI crude oil price to be $56 per barrel, both lower than previous expectations; Goldman Sachs has further lowered its forecasts for oil prices in 2026, with the Brent crude oil average price for 2026 significantly reduced to $56 per barrel, and the WTI crude oil average price expected to drop to just $52 per barrel, compared to Goldman Sachs' previous expectations of $58 per barrel and $55 per barrel, respectively. Goldman Sachs' views align with those of other Wall Street financial giants such as Bank of America, Morgan Stanley, and ING, all predicting significant "over-supply" in the oil market in 2025 and 2026. Goldman Sachs recently downgraded its expectations for international oil prices once again, expecting a much weaker growth in global crude oil demand under the "tariff storm" led by the Trump administration, leading to a continued fermentation of the expectation of "over-supply" in the oil market this year. Goldman Sachs believes that global oil demand will suffer a historically significant setback, with its expectation for a substantial increase in the "over-supply" of the oil market in 2025 - expect an excess of up to 800,000 barrels per day (mb/d), and in 2026, the excess is expected to be as high as 1.4 million barrels per day. The bank also stated that these surplus pressures will continue to exert strong pressure on Brent crude oil and WTI prices. The Dutch international group ING recently released a research report stating that although the US and China have reached a temporary agreement to reduce tariff rates in Geneva, which will help improve the sentiment in the oil market, real improvement in demand prospects will require substantive progress in reducing long-term tariffs, in addition to OPEC+ exceeding production expectations, making the supply side appear increasingly loose, especially in the second half of this year.In the new year, the ING analysis team predicts that the oversupply of crude oil will continue to expand.For the crude oil market, the relatively positive news is that on Monday, China and the United States announced a 90-day suspension of mutual tariff imposition after weekend trade policy communication in Geneva, and both sides expressed their intention to continue promoting economic and trade cooperation. This has raised hopes of a thaw in the trade war between the world's two major super economies, sparking a significant rebound in Brent crude oil and WTI crude oil prices on Monday. However, due to ongoing concerns about oversupply, international crude oil prices still face downward pressure. The latest signal from OPEC+ indicates an increase in production in May and June. In addition, Trump stated that positive progress has been made in the nuclear negotiations with Iran, reinforcing expectations that the US may ease sanctions on Iranian oil exports.