Wall Street banks are racing this week to slash their oil price forecasts for 2025 and 2026 after OPEC+ threw another curveball at the market this weekend by vowing to continue raising production by more than initially planned.

Commodity strategists and analysts from major U.S. and European investment banks have issued notes with downgraded oil price forecasts for 2025 and 2026 since OPEC+ producers led by Saudi Arabia and Russia agreed on Saturday to raise collective output by 411,000 barrels per day (bpd), nearly triple the volume originally scheduled.

The move follows a similar surge announced for May and signals a sharp reversal from OPEC+ efforts to defend relatively high oil prices.

Saudi Arabia Changes Tack

Saudi Arabia is signaling that it would not tolerate any longer OPEC+ producers regularly busting their quotas while others, such as the Kingdom, stick to their production ceilings per the OPEC+ agreement. Iraq and Kazakhstan have been the OPEC+ members chronically pumping above their quotas, continuously promising to “compensate for previous overproduction,” and continuously failing to do so.

So, OPEC’s top producer and leader of the OPEC+ alliance decided to make it easier for the cheaters to “compensate” and, in the meantime, increase its own production after years of trying to “stabilize the market.” Analysts also say that the Saudis are leading another OPEC+ effort to discipline the U.S. shale industry and force a slowdown in drilling activity and production growth through oil prices lower than the breakevens for new shale wells.

OPEC cited “current healthy oil market fundamentals” to explain its second decision in as many months to bundle three monthly increases into one month, which would result in more than 800,000 bpd of new supply when June ends.

The market appears anything but healthy. Demand may be picking up somewhat due to the lower oil prices, but fears of recessions and muted demand growth due to the U.S. tariff barrage and trade blitzes continue to override oil market sentiment. The small surplus expected later this year has now been revised upwards to more than 1 million bpd of glut at some banks.

Major banks moved to cut their oil price forecasts, seeing a larger-than-expected surplus and weakened oil demand growth.

Banks Take Note

In the case of Goldman Sachs, its commodity strategists slashed their oil price forecast for a third time in one month, following the announcement of another aggressive production hike from OPEC+.

Goldman’s analysts now see Brent Crude prices averaging $60 per barrel this year, down from a previous forecast of $63 a barrel. The average price of the U.S. benchmark, WTI Crude, was now downgraded at Goldman Sachs to $56 for 2025, down from $59 a barrel previously expected.

Next year, Brent is set to average $56 a barrel, down from $58, and WTI is expected at $52, down from $55 per barrel in the previous forecast from mid-April.

“Saturday’s decision increases our confidence that the new baseline size of production increases is likely 0.41mb/d,” Goldman Sachs’ strategists wrote in a note on Sunday.

“The decision likely reflects relatively low inventories and a broader shift to a more long-run equilibrium focused on supporting internal cohesion and on strategically disciplining U.S. shale supply,” the bank’s strategists said.

The Goldman team, led by the head of oil research Daan Struyven, also noted that “Our key conviction remains that high spare capacity and high recession risk skew the risks to oil prices to the downside despite relatively tight spot fundamentals.”

Morgan Stanley also cut its oil price forecasts for the remainder of the year, anticipating a bigger glut. The bank revised down its projection of Brent Crude prices to $62.50 per barrel in the third and fourth quarters of this year, down by $5 per barrel from the previous forecast.

The market glut could reach 1.1 million bpd in the second half of the year, Morgan Stanley reckons. That’s an upward revision of 400,000 bpd from the previous surplus forecast.

“We interpret OPEC+’s communication as an indication that it may unwind its production quota faster altogether,” Morgan Stanley analysts, including Martijn Rats, said in a note carried by Bloomberg.

UK bank Barclays cut its Brent forecast by $4 to $66 per barrel for this year and by $2 to $60 a barrel for next year.

ING also slashed its Brent forecast for the remainder of 2025 – from $68 to $62 per barrel. This leaves the new 2025 average forecast at $65, down from $70 a barrel previously.

“This will change if OPEC+ reverses policy once again or if lower oil prices embolden President Trump to take a more aggressive approach toward several sanctioned oil-producing countries,” said Warren Patterson, Head of Commodities strategy at ING.

“The key to knowing how far the Saudis will take what is starting to look like a price war is the nation’s tolerance for low oil prices over time,” Patterson noted.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com

The (USDJPY) price settled on a rise in its recent intraday trading, supported by its trading above EMA50, and under the dominance of a bullish correctional wave on the short-term basis, alongside the bias line, the pair is preparing to attack the current resistance level at 144.00.

On the other hand, we notice the beginning of negative overlapping signals appearance on the (RSI), after reaching overbought levels, which might decelerate the rise and provide chances for bearish correctional rebounds that the price attempt to use it to offload these overbought conditions and gain the required positive momentum to breach the mentioned resistance.

The (USDJPY) price settled on a rise in its recent intraday trading, supported by its trading above EMA50, and under the dominance of a bullish correctional wave on the short-term basis, alongside the bias line, the pair is preparing to attack the current resistance level at 144.00.

On the other hand, we notice the beginning of negative overlapping signals appearance on the (RSI), after reaching overbought levels, which might decelerate the rise and provide chances for bearish correctional rebounds that the price attempt to use it to offload these overbought conditions and gain the required positive momentum to breach the mentioned resistance.

• Silver regains positive traction following the previous day’s pullback from over one-week high.
• The technical setup favors bullish traders and supports prospects for further near-term gains.
• A break below a short-term descending channel support is needed to negate the positive bias.

Silver (XAG/USD) attracts fresh buying during the Asian session on Thursday and reverses a major part of the previous day’s retracement slide from over a one-week high. The white metal climbs to the $33.00 neighborhood in the last hour and seems poised to appreciate further.

From a technical perspective, a descending channel on short-term charts constitutes the formation of a bullish flag against the backdrop of the recent goodish recovery from the $28.45 area, or the year-to-date low touched in April. Moreover, oscillators on daily/hourly charts are holding in positive territory, validating the near-term constructive outlook for the XAG/USD.

However, it will still be prudent to wait for a breakout above the trend-channel hurdle near the $33.20 area before positioning for additional gains. The XAG/USD might then aim to surpass the $33.70 intermediate barrier and reclaim the $34.00 round-figure mark. Some follow-through buying will be seen as a fresh trigger for bulls and pave the way for a further appreciation.

On the flip side, the $32.50-$32.45 area, followed by the overnight swing low, around the $32.25 region, could offer some support to the XAG/USD ahead of the $32.00 mark. The next relevant support is pegged around the $31.60-$31.55 zone, representing the lower end of the aforementioned trend-channel, which, if broken, might shift the near-term bias in favor of bearish traders.

Silver daily chart

• Gold price challenges $3,400 again as US trade talks grab attention.
• The US Dollar returns to the red after the Fed raises concerns over economic uncertainty.  
• Gold price yearns for acceptance above $3,435 for a sustained upside.

The gold price is back on the bids early Thursday, challenging the $3,400 mark amid renewed weakness in the US dollar and a revival of safe-haven demand.

Gold price looks north amid trade and geopolitical risks

Markets remain broadly upbeat due to China’s cut in the Reverse Repo Rate and in anticipation of US President Donald Trump’s expected announcement of a major trade deal. The Wall Street Journal (WSJ) and the New York Times cited that Trump is likely to announce a framework of a trade deal with the UK later in the American morning on Thursday.  

However, the optimism fails to lift the sentiment around the US Dollar (USD) as the US Federal Reserve (Fed) voiced its concerns over the heightened economic uncertainties in the face of Trump’s erratic trade policies.

The Fed kept the federal funds rate unchanged in the range of 4.25% to 4.50% on Wednesday, maintaining a cautious stance on the policy outlook. The Fed’s policy statement read that risks of higher inflation and unemployment had risen, further clouding the US economic outlook.

During the press conference, Fed Chairman Jerome Powell stated that “it isn’t clear whether the economy will continue its steady growth or wilt under mounting uncertainty and a possible spike in inflation,” according to Reuters.

Further, Gold price continues to derive support from safe-haven inflows, courtesy of the ongoing geopolitical tensions in the Middle East and between Russia and Ukraine. Ukraine’s air force reported that Russian aircraft had launched guided bombs on the Sumy region of northern Ukraine in the early hours of Thursday morning. This occurred just a few hours after a three-day ceasefire declared by Russian President Vladimir Putin took effect.

Meanwhile, Oman said on Wednesday that it brokered a truce between Washington and Houthis, saying neither side will target the other. However, Houthi leaders have insisted on social media that they have no intention of ceasing their attacks.

In the Asian sub-continent, Pakistani Prime Minister Shehbaz Sharif vowed response after the Indian armed forces early Wednesday carried out missile attacks on nine terror targets in Pakistan and Pakistan-Occupied Kashmir (PoK), Heavy exchanges of artillery fire have been reported along the Line of Control (LoC) dividing Indian- and PoK, according several media outlets.

Amidst heightened trade uncertainties and geopolitical risks, Gold price is likely to remain the go-to safety net for investors. They keenly await the US-Sino trade talks from May 9 to May 12 in Geneva, especially after US President Trump said Wednesday that there is no potential for pulling back 145% tariffs on China.

Any retracement in Gold price due to optimism over potential US trade deals will remain a good dip-buying opportunity as policymakers globally grapple with the impact of Trump’s tariffs. The daily technical setup also remains favourable for Gold buyers in the near term.

Gold price technical analysis: Daily chart

Gold price is poised to retake the channel support (now resistance) after finding buyers once again near $3,360.

The 14-day Relative Strength Index (RSI) appears bullish, as it remains above the midline near 62, suggesting that further upside remains in the offing.

Gold price must establish a firm foothold above the two-week high of $3,435 for a sustained upside momentum. The next topside target is at the record high of $3,500.  

Further up, the channel support (now resistance) at $3,525 will be on buyers’ radars.

On the downside, the $3,360 is the initial support line, below which the 21-day Simple Moving Average (SMA) at $3,301 will be tested. Deeper declines will challenge the May 2 low of $3,223.

Establishes Higher Daily High and Higher Low

The rally from the April swing low at $2.86 faced a potentially significant resistance zone around Monday’s high at $3.66. There is a range marked by several indicators from $3.72 to $3.74. However, the 50-Day MA has been falling and is now at $3.76, close enough to the initial range to be included. It also offers more useful price levels. The next major hurdle for the bull trend is a daily close above the 50-Day line. Until that happens the expectation is for resistance to continue to be seen up to the 50-Day MA.

Several Indicators Mark Resistance Zone

There is the confluence of several indicators identifying the resistance zone. The range begins with the 61.8% Fibonacci retracement at $3.72. There is then the neckline for a recent head and shoulders topping pattern at $3.74. That price level was confirmed twice as swing lows of the pattern formed in March. Therefore, the neckline has some significance even before the head and shoulders formation is incorporated into the analysis. But there is also an AVWAP level around $3.74. It is anchored on the recent peak.

May Respond to Rise Above $3.76

Since there a several price levels identified close together, an upside breakout through the top of the range would be bullish of course, but more so given the significance of the resistance zone. Furthermore, if it occurred prior to a deeper pullback below $3.42, the bullish implications would strengthen further.

For a look at all of today’s economic events, check out our economic calendar.

XAU/USD Current price: $3,387.65

• US-China initial trade talks set to begin next Wednesday, according to Sec Bessent.
• The Federal Reserve is widely anticipated to keep interest rates on hold.
• XAU/USD consolidates below $3,400 as market players await the Fed’s decision.

Gold consolidates just ahead of the $3,400 mark on Wednesday, unchanged on a daily basis as investors await the United States (US) Federal Reserve (Fed) monetary policy decision. The central bank is widely anticipated to keep interest rates on hold, as uncertainty about President Donald Trump’s tariffs weighs on US policymakers.

The US Dollar (USD) has been confined to familiar levels throughout the day, as investors assess different news. On the one hand, headlines indicated that the US and Chinese trade teams will meet in the upcoming days to de-escalate tensions. US Treasury Secretary Scott Bessent anticipated initial talks would begin on Saturday, clarifying that those would not be advanced discussions.

On the other hand, stocks trade with a sour tone amid big losses in the tech sector, adding to the market’s caution.

With no action expected from the Federal Reserve (Fed), the focus will be on the following press conference by Chairman Jerome Powell. Powell is expected to face questions on the central bank’s independence and his relationship with President Trump, beyond those related to the future of monetary policy.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart for the XAU/USD pair shows it managed to post a higher high for the week before retreating. The risk remains skewed to the upside, although another corrective leg lower remains in the picture. In the mentioned chart, the bright metal keeps developing well above a bullish 20 Simple Moving Average (SMA) currently at $3,297.20, while the 100 and 200 SMAs maintain their upward slopes far below the shorter one. However, technical indicators head south, holding within positive levels but suggesting buyers have paused.

In the near term, and according to the 4-hour chart, the XAU/USD offers a neutral-to-bullish stance. The pair trades well above all its moving averages, with the 20 SMA advancing above an also bullish 100 SMA. Additionally, technical indicators consolidate within positive levels, with the Momentum indicator heading marginally lower, not enough to confirm an upcoming slide.

Support levels: 3,392.25 3,277.60 3,263.10

Resistance levels: 3,430.20 3,444.25 3,468.30

The GBPJPY pair provided new negative trading, attempting to break the support of the sideways triangle at 190.85 level, but it bounced again towards 191.10, keeping its stability below the moving average 55.

While providing negative momentum by stochastic approach from 20 level makes us wait for confirming breaking the current support, which allows it to activate the negative attack, which might target 189.90 level reaching the next target at 189.20.

The expected trading range for today is between 189.90 and 191.50

Trend forecast: Bearish