When Will Oil Prices Drop? Complete Analysis 2024-2025

Many investors are asking the crucial question: when will the price of oil drop? The answer is not straightforward, as the market is influenced by multiple factors that generate constant volatility. However, based on technical analysis and projections from international energy agencies, we can offer a clear perspective on the expected trends for the rest of 2024 and all of 2025.

The Current Oil Market Outlook

By mid-2024, WTI crude is trading around $80.9 per barrel, while Brent hovers around $84.78. These prices reflect a significant moderation compared to the $120 reached in February of this year, when U.S. demand was at its peak.

The trajectory of oil in 2024 has been turbulent. It started the year near $100, driven by winter demand and geopolitical tensions. Then, in March, it experienced sharp declines due to changes in economic outlooks and regional conflicts. During the second quarter, prices stabilized between $85 and $90, although downward pressure persisted.

Key Factors Influencing the Current Price

The strong dollar remains a decisive factor. As the Federal Reserve maintains high interest rates, the U.S. dollar strengthens, making oil more expensive for buyers in other currencies. This situation has significantly pressured global demand.

Geopolitical tensions in the Middle East and Ukraine create uncertainty that maintains a certain risk premium in prices, but without sustained bullish pushes. Simultaneously, concerns about a global economic slowdown limit demand, especially considering China’s economic situation, one of the main global consumers.

OPEC also plays a central role. Its decisions on production cuts can cause immediate fluctuations, although the impact has been limited due to structural demand weakness.

Projections for When Oil Prices Will Drop

According to recent technical analysis, WTI’s key resistance is at $82. If this barrier is broken upward, we could see a bullish continuation during the second half of 2024. However, MACD indicators suggest positive but not explosive momentum.

For Brent, resistance is at $86. A break above this level would trigger an upward trend, but moving averages still do not show definitive signs of extreme strength.

More importantly: international energy agency projections expect a downward trajectory for 2025. Brent is anticipated to average $88 in the first quarter of 2025, gradually decreasing to around $83 by year-end. WTI would follow a similar trend, starting around $87 and declining as global reserves increase.

This expected decline is mainly attributed to increased global fuel production outside of OPEC+ and moderation in global demand.

Why Will Prices Drop? Catalysts for the Decline

Several elements suggest price drops in the near future:

Increased supply: Production in the U.S., Brazil, and other non-OPEC+ producers continues to grow, gradually saturating the market.

Moderate demand: The potential global economic slowdown, combined with a strong dollar, will continue to limit oil demand.

Strategic reserves: As global storage normalizes post-pandemic, pressure on prices decreases.

Energy transition: Stricter environmental policies are driving substitution toward renewable energies, reducing long-term demand.

Investment Opportunities in Oil

Despite volatility and moderate price outlooks, oil remains attractive for investors. Shares of major oil companies like ExxonMobil, Chevron, BP, and Shell offer consistent dividends and diversification into renewables.

Energy ETFs directly replicate crude oil performance without managing futures contracts. CFDs allow speculation in both bullish and bearish markets, though with high leverage risks.

Energy indices like the S&P Energy Index provide diversified exposure to multiple sector companies, mitigating individual risks.

Why Continue Investing in Oil

Although prices may gradually decline, oil remains relevant as an inflation hedge. Major producers are investing heavily in clean energy, reducing sector risk in the long term. Global demand remains strong; the energy transition will be gradual.

Including oil in a diversified portfolio remains strategic: it stabilizes returns during inflation, generates high dividends, and captures growth from emerging economies demanding energy.

Risks to Monitor

Volatility will continue to characterize the market. Sudden changes in geopolitical conflicts can cause price spikes. Stricter environmental regulations could negatively impact profitability. Operational risks in exploration and production remain high.

Conclusion: Preparing for When Oil Prices Will Drop

Oil prices will gradually decline during 2025, according to projections supported by technical and fundamental market analysis. This decline will be moderate, not catastrophic, due to ongoing demand growth in emerging economies.

Investors should monitor technical resistance levels, changes in Federal Reserve monetary policy, and OPEC decisions. Establishing entry points during price dips positions investors better for sustainable returns.

The key point: oil will continue to be essential for the global economy. While when oil prices will drop is predictable in the short term, investment opportunities in this sector remain solid for medium- to long-term investors seeking diversification and inflation protection.