Artificial intelligence is the undoubted protagonist of the unstoppable rise of Wall Street and the key to the S&P rebound of 34% from the April lows. It is the epicenter of current stock market optimism, and whether or not the feared correction arrives (last week was marked by market jitters), it retains its title as the undisputed powerhouse of the stock market, with investors dazzled by its future potential and its current mind-boggling numbers. Stocks advance without fear of heights and despite enormous uncertainties such as the high volume of sovereign debt or geopolitical risk. But underground in the trading floor, an additional element survives which, discreetly, supports the euphoria: a low oil price, falling and with the prospect of remaining cheap, which wards off inflationary tensions and does not ruin the picture of low rates and solid company results.
The barrel of Brent oil has fallen 15% this year and its price has gone from being a headache to becoming a relief for central banks. Excess supply is proving decisive in its reduction, together with lower demand which aims to become structural with the advance of renewable energy. Geopolitics also inevitably plays a role: crude oil becomes more expensive with each episode of sanctions against Russia over the war in Ukraine. But for Donald Trump the priority is to guarantee cheap oil so that Americans do not panic when they go to fill up the tank. Not in vain one of his electoral promises was “drill, honey, drill” (“drill, girl, drill”), although with Biden the fracking had transformed the United States into the world’s leading producer.
“Its rise is what could trigger inflation faster and its price now is a tailwind. And central banks guarantee plenty of liquidity, nothing will break in the market,” says Ismael García Puente, deputy director of investment strategy at Mapfre AM. The market is confident in a context of falling interest rates in the United States and practically unchanged in the euro zone, an expectation to which the majority contributes, predicting that oil will maintain its low price, with a continuing downward trend. For Rosa Duce, head of investment strategies at Deutsche Bank in Spain, “it is clear that the Fed, like other central banks, such as the ECB, are considering a scenario of moderate oil prices, and this is undoubtedly an important factor when it comes to lowering rates. But perhaps it is not the most important. The key is the situation of the labor market, especially in the United States”.
For the expert, the excess supply of oil is evident, which is why the company expects a Brent barrel to be around $60 by September 2026. “The change in OPEC+ policy (from cuts to production increases) is generating an excess supply, especially since American production also continues to grow, so the same cartel has decided not to carry out further production increases in the first quarter of 2026,” adds Duce.
Whether on purpose or not, the Persian Gulf producing countries, led by Saudi Arabia, are appeasing Trump in his goal of cheap crude oil with each of the production increases they have agreed to. “OPEC is willing to stop increasing production before the market becomes saturated. The level of a barrel of Brent between $55 and $60 would be the limit it could accept in its goal of recovering the market share ceded to the United States starting from 2022,” explains Francisco Blanch, head of raw materials and derivatives at Bank of America. Their forecast is that Brent will sit between $60 and $65 in the first half of next year, without ruling out that it could rise above 60. Goldman Sachs expects oil to continue to fall in 2026 to an average level of $56 a barrel for Brent and $52 for West Texas, an estimate that has not changed despite the latest US sanctions against Russian oil companies, which include pressure on India and China to prevent the purchase of Russian crude under the threat of tariffs.
Swiss bank Pictet predicts that Brent will trade between 65 and 70 dollars in the coming years. Luca Paolini, chief strategist at Pictet AM, argues that OPEC is losing collective discipline in controlling supply and its excess capacity has reached 5% of global demand, compounded by declining demand as the electrification of the economy advances: “Electric vehicles have avoided more than a million barrels per day of oil consumption in 2024.”
At AFI they agree that oil is in a clear bearish dynamic due to oversupply and forecast that the Brent barrel will fall to a range of $55 to even $50 in 2026 and rise to between $60 and $63 in 2027 with some recovery in demand. “The price of oil is not the only factor, but it contributes to creating a positive context for stock markets, which enjoy a favorable macroeconomic context and the boost that artificial intelligence should bring to productivity and growth,” explains Olivia Álvarez, analyst at AFI. Paolini also points to the abundance of liquidity as a determining factor in the stock market rally. “Optimism is maintained by very favorable liquidity conditions, with 83% of central banks in expansionary mode, by improving economic and corporate profits, with more than 80% of US companies beating estimates,” says Pictet AM’s chief strategist. The Swiss company has revised up its U.S. growth forecast to 1.8% this year and 1.5% in 2026 and currently sees no classic signs of a stock market bubble, such as high leverage or inflated profit expectations.
