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Oil markets to come under pressure in short-term

Oil&Gas Materials 24 February 2015 14:53 (UTC +04:00)

Baku, Azerbaijan, Feb. 24

By Aygun Badalova - Trend:

Oil markets will come under pressure in the short-term perspective with Brent price to down to $43 per barrel in the second quarter of 2015, analysts of the US JP Morgan bank.

The near term outlook for Brent prices remains, in analysts' opinion, weaker than the current level.

"Brent prices have gained more than $13per barrel from their lows in mid-January as continued healthy demand for crude from refineries and supply disruptions have tightened market balances," analysts said in a report obtained by Trend.

The rally in Brent crude prices over the past four weeks appears to be the result of substantial, but temporary disruptions to supply that should fade in the coming weeks, analysts believe.

Despite the rally in prices analysts expect that the structural factors that underpinned last year's crude price decline, namely the strong growth in US crude output, structurally weak economic growth in European and Emerging Markets Asia and the lack of coherent production policy from

OPEC will result in building crude surplus in the Atlantic Basin.

Assuming that Brent markets witness a reversal of the supply losses that have tightened them significantly in recent weeks, JP Morgan's analysts expect weaker Brent cash differentials and structure to erode the support for Brent crude against other benchmarks, notably WTI.

Brent-WTI spread is expected by the analysts at $2 per barrel in the second quarter of 2015 before widening to $3 per barrel in the third quarter and $5 per barrel in the fourth quarter of the year.

During electronic trading on the New York Mercantile Exchange on February 23, the West Texas Intermediate (WTI) for April 15 delivery decreased by $0.33 to $49.12 a barrel.

Brent crude (which is the benchmark price for products in Europe and Asia) for April 15 delivery decreased by $0.11 to $58.79 a barrel on the London-based ICE Futures Europe exchange.

Analysts believe that Brent has advanced more than WTI and rebounded over 22 percent from its January low, because the European benchmark is more sensitive to global supply disruptions.

Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter:

@AygunBadalova

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