On September 5, Daishin Securities dismissed concerns that international oil prices would fall into the $40-per-barrel range next year, deepening the low oil price phase. The company analyzed that while the price ceiling will remain limited through the end of this year, a gradual price recovery is expected in the following year.
Choi Jinyoung, a researcher at Daishin Securities, stated in the report "Concerns Over $40 Oil Prices: The Role of Non-Cartel Countries and Liquidity" released on this day, "We advise against worrying that the low oil price phase in the $40 range will intensify next year."
Previously, the U.S. Energy Information Administration (EIA) projected that the price of West Texas Intermediate (WTI) crude oil would fall to the $50-per-barrel range in the fourth quarter of this year and enter the $40 range next year. The EIA argued that increased supply from non-cartel countries, including the United States and Canada, combined with an earlier-than-planned production hike by the Organization of the Petroleum Exporting Countries Plus (OPEC+), would lead to inventory pressures.
Regarding this, Choi noted, "It is true that OPEC+ supply is increasing faster than initially expected," but also analyzed, "Contrary to the EIA's argument, the possibility of oil prices plunging into the $40 range in 2026 is limited."
He first pointed out, "Excluding the current production increase as originally planned, about 2.192 million barrels per day could be supplied immediately." However, he emphasized, "The key issue is that if OPEC+ restores (increases) the remaining production cuts within this year, the market may focus on the fact that there will be no further capacity for additional production increases next year." In other words, OPEC+'s current price pressure could erode its supply capacity for next year.
He also highlighted, "It is important to note that the current low oil prices could block non-cartel countries from increasing supply next year." While Brazil and Norway, with relatively low break-even points (BEP), may not be significantly affected, major suppliers such as the United States and Canada will face practical limitations in developing new oil fields. Therefore, it will be even more difficult to expect increased supply from non-cartel countries next year than the EIA predicts.
The liquidity environment is also positive for future oil prices. Like other commodities, crude oil, as a physical asset, lags behind liquidity. Choi emphasized, "The increasingly abundant liquidity environment cannot be ignored." He explained, "Liquidity released mainly by the People's Bank of China (PBOC) and the European Central Bank (ECB) is now waiting for the U.S. Federal Reserve's policy rate cut and the easing of the Supplementary Leverage Ratio (SLR) regulation. Since oil prices lag the global liquidity index by about nine months, this presents an attractive direction for oil prices."
He concluded, "Rather than worrying about oversupply, attention should be paid to the fact that oil prices will follow liquidity. While the price ceiling will remain limited through the end of this year, a gradual recovery is expected next year." Meanwhile, on September 4 (local time), October WTI futures on the New York Mercantile Exchange closed at $63.48 per barrel, down $0.49 (0.77%) from the previous session.
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