Baku, Azerbaijan, Sept.30
By Leman Zeynalova – Trend:
The US JP Morgan analysts have revised their forecasts on Brent and West Texas Intermediate (WTI) oil prices up.
“We raise oil price forecasts by $4.50 per barrel on Brent and $1 per barrel on WTI for the fourth quarter of 2017 on the back of tighter balances, following better demand growth, hurricanes that boosted refining margins and stronger than expected OPEC compliance,” said the analysis obtained by Trend.
Brent is forecast to average $54.50/bbl and WTI $50.00/bbl, respectively in 4q’17.
Furthermore, JP Morgan raises 2018 Brent to $47/bbl, and WTI to $43.25/bbl on the back of more conservative assumptions on OPEC/non-OPEC production cuts and improving demand outlook.
“Essentially, we continue to expect the OPEC deal to support prices in the short term, but we retain reservations about the implications for supply growth from higher prices, once the deal is unwound,” said the analysis.
Lower OPEC output keeps markets tight in the short term, but JP Morgan retains the view that inventories will build in every quarter next year despite OPEC delivering on their agreement, and current higher prices incentivize additional US shale investment.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.
OPEC and participating non-OPEC producing countries recorded the highest conformity ever with their voluntary adjustments in production, achieving a level of 116 percent as of August 2017.
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