Goldman Sachs predicts that Brent crude prices will fall to the low USD 50s by late 2026. This forecast stems from a global oil market that is expected to have more supply than demand. The expected supply will exceed demand by an average of 1.8 million barrels per day from Q4 2025 to Q4 2026. This surplus is likely to increase global oil inventories by nearly 800 million barrels by the end of 2026.

Major Global Oil Market Surplus

We are seeing a significant oil market surplus starting in the fourth quarter of this year. This imbalance between supply and demand is expected to push Brent crude prices down into the low $50 range by late 2026. Derivative traders should prepare for a period of lower prices in the next 18 months. The current supply situation looks heavy. U.S. shale production has been strong, with July 2025 output exceeding 13.5 million barrels per day, the highest in several years. Some OPEC+ countries are also starting to go over their production limits, indicating potential issues within the group. On the demand side, signals are weakening, especially with recent manufacturing data from China falling short of expectations. This has led to unexpected inventory increases in the U.S., with the latest weekly report showing an increase of over 2 million barrels when a decrease was expected. These signs point to storage filling up ahead of the anticipated surplus.

Developing Trends and Market Strategies

We’ve seen this situation before, similar to the oil price crash of 2014-2016. At that time, a surge in non-OPEC supply created a significant inventory glut that kept prices low for a long period. The forecast of nearly 800 million barrels in new inventory by late 2026 suggests we could face another prolonged downturn. Traders should think about taking bearish positions in the next few weeks using contracts that extend into 2026. Buying long-dated put options on Brent for mid-2026 expiries could provide protection against falling prices with limited risk. Another strategy could be to sell call credit spreads to benefit from both declining prices and the effects of time decay. Create your live VT Markets account and start trading now.

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