Investment bank JP Morgan on Friday raised its outlook for oil prices, but lowered its forecast for global crude demand-growth this year amid increasing uncertainty over international trade.
The U.S. bank said prices for Brent crude, the international benchmark for oil markets, would average $70 per barrel in both 2018 and 2019, up from an earlier forecast of $65 and $60 per barrel respectively. Brent stood at around $74 on Friday.
“Uncertainty around actual OPEC production increases, current budget constraints and sanction effects could mean near-term oil prices remain elevated,” the bank’s European equity research team said in a note.
The Organization of the Petroleum Exporting Countries in June agreed on modest increases in oil production starting in July but it is not yet clear how those will pan out, while the United States is set to reimpose sanctions on major crude supplier Iran in November.
However, the bank said oil prices would be capped by “rising OPEC spare capacity and short-cycle U.S. shale well economics against a muted demand growth-backdrop in 2018/19”.
It revised its 2018 demand-growth outlook to 1.2 million barrels per day (bpd) from 1.4 million previously, though its 2019 forecast edged up a touch to 1.1 million bpd from 1 million.
“The global macro outlook, weakness in emerging market currencies, impact of the last rally in oil prices, impact of sanctions on Iran and rising trade uncertainties are all potential risks to oil demand-growth,” the bank said.
Source: Reuters
