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2018 Brent forecast raised to $58/bbl

Oil&Gas Materials 30 October 2017 13:12 (UTC +04:00)

Baku, Azerbaijan, Oct.30

By Leman Zeynalova – Trend:

Forecasts for Brent and West Texas Intermediate (WTI) oil for 2018 have been raised by $11 per barrel and $11.4 per barrel, respectively, according to the US JP Morgan Bank.

“Our 2017 forecasts for Brent and WTI have been raised by $0.8 per barrel and $0.7 per barrel and 2018 forecasts have been raised by $11 per barrel and $11.4 per barrel, respectively,” said the report obtained by Trend.

JP Morgan’s 2018 oil price expectation has increased more significantly because of tighter markets starting to draw down oil on a more sustainable basis, stronger global economic growth, and expected demand growth on the back of that, and supply-side certainty not only from OPEC but also from some non-OPEC players for last ten months, according to the analysts.

“WTI/Brent spreads are impacted by two factors: the relative strength in Brent from geopolitical disruptions in Iraq and talks around an OPEC deal extension and the hold-up of oil in Cushing in the US that has clearly incentivized pipelines to charge higher tariffs,” said the report.

However, JP Morgan believes that WTI-Brent spreads might weaken further towards the end of the year before strengthening next year on the back of softening US supply growth, potentially even declining on the back of recent slowdown in rig activity, stabilization in well productivity and rising cost inflation.

“Any disappointment from OPEC and non-OPEC on the extension of their deal, or no clear and quantifiable direction for 2018 and beyond, would cause nervousness in the market, and with fear of low returns, we could quickly see another sell-off in a market,” said the report.

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