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Investing.com - Crude oil prices had a difficult first half of 2025, and BCA Research sees more downside as the year progresses as bearish demand developments dominate.
The main global benchmark Brent lost over 6% in the first half of the year, to trade just below the $70 a barrel level, with a clear outperformance of defensive commodities (precious metals) relative to their more cyclically sensitive peers (energy and industrial metals).
Oil markets only flinched in the face of the ultimate supply risk in June (the potential closure of the Strait of Hormuz), according to analysts at BCA Research, in a note dated July 8.
“Therefore, the bar is now higher for market participants to become concerned about possible supply disruptions. Tensions would need to escalate substantially to faze oil investors,” BCA Research said.
Instead, crude fundamentals will dominate oil market dynamics over the remainder of the year. In particular, bearish demand-side developments will maintain downside pressure on crude prices.
For its part, the Organization of Petroleum Exporting Countries cannot be counted on to prevent a selloff, BCA said. Instead, OPEC’s pivot to outsized production hikes reveals a shift in its primary policy objective from defending a floor in crude prices to geopolitical and oil market share considerations.
“Bearish demand fundamentals will dominate crude’s price trajectory in H2,” BCA Research said. “OPEC is unlikely to backstop oil prices. Meanwhile, geopolitical risks will take a backseat in shaping oil market developments.”
BCA Research advises investors to go short Brent, with a stop loss at $75/bbl.