Banks Are Unanimously Bearish On Oil – Is It The Contrarian Opportunity For 2026?

Oil is closing 2025 as one of the negative-performing assets. Despite starting the year with a rally, oil's movement soon became typical bear-market dynamics. Consistent price decline interrupted by volatile, sharp double-digit rallies.

Still, even in that environment, oil majors saw significant performance discrepancies. ConocoPhillips (NYSE:COP) lost 8.3% year-to-date, while Exxon Mobil (NYSE:XOM) squeezed a double-digit gain of over 11%.

Going into 2026, oil has become one of the most consensus-bearish assets across global institutions. Forecasts from major banks cluster tightly around the view that prices will remain subdued. The reasons include persistent oversupply, slowing demand growth, and the long shadow of the energy transition.

J.P. Morgan expects crude to average close to $53 per barrel in 2026, while Goldman Sachs sees prices near $52 as global surpluses widen. Morgan Stanley, Citi, and the US Energy Information Administration broadly reinforce that outlook, projecting a market weighed down by non-OPEC+ supply growth and weaker macro momentum. Meanwhile, Bank of America sees it at $57 per barrel, quoting three key downside risks as peace in Ukraine, a pro-market government in Venezuela, and a worsening economic outlook.

Unanimous alignments are rare in commodity markets. An old Wall Street guideline is that when everyone agrees on something, expect the opposite.

The Contrarian Opportunity

The pessimism is precisely what makes oil a spotlight contrarian opportunity for the following year. While bearish forecasts dominate the headlines, structural constraints are quietly tightening. Years of underinvestment followed the 2020 price collapse, and ESG pressures have just helped thin the global project pipeline.

Per the IEA, discovery rates remain weak, long-cycle developments were deferred, and natural decline rates of existing fields continue to erode supply.

OPEC+ policy adds another layer of asymmetry. According to Reuters, the group has repeatedly shown its willingness to delay output increases to defend price floors, limiting downside risk while leaving the market exposed to upside shocks.

Meanwhile, demand destruction has proven slower than expected. Consumption linked to aviation, petrochemicals and emerging markets remains resilient, and China continues to play an opaque but supportive role through strategic stockpiling and industrial demand.

Thus, the market expects abundance, which clashes with an increasingly brittle supply system.

Challenges That Remain

Yet, the contrarian case is far from guaranteed. A global recession, sharper-than-expected gains in electric vehicle adoption, or a breakdown in OPEC+ cohesion could push prices lower and prolong oversupply. US shale, while slowing, could still respond faster to price signals than anticipated. Timing also remains a critical challenge. Oil downturns can persist longer than fundamentals alone would suggest.

Still, the combination of extreme bearish consensus, structural underinvestment, and policy-driven supply management suggests oil in 2026 may offer asymmetric upside. In a market where nearly everyone expects weakness, even modest surprises could have outsized effects.

Price Watch: United States Oil Fund (NYSE:USO) is down 10.98% year-to-date.

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