Why 2019 more challenging for oil prices?
Baku, Azerbaijan, Feb.20
By Leman Zeynalova – Trend:
The US JP Morgan bank has revised its forecasts for Brent and West Texas Intermediate (WTI) oil price down by $2 per barrel to $68 per barrel and $64 per barrel respectively for the first quarter of 2018.
“This reduces 2018 Brent and WTI price forecasts to $69.50 per barrel and $65.19 per barrel respectively. We are still bullish for 2018 on average as we see markets being balanced for most part of this year,” said the JP Morgan report obtained by Trend.
The bank introduces a 2019 Brent and WTI forecast of $64.00 per barrel and $58.50 per barrel, respectively.
“We think the consequences of OPEC’s decision in late-2016 (in conjunction with Russia and other non-OPEC countries), to curtail supply still reverberates around the oil market today. This shift in production policy boosted prices and, perhaps more importantly, reduced uncertainty for US shale producers in the short term. It has also unleashed a new wave of production growth from US shale that will likely soften balances and pressure oil prices into 2019,” said the report.
JP Morgan remains constructive on short-term price dynamics, but increasingly concerned about prices in early 2019.
“The prospect of even stronger US production growth than the current 1.2 million barrels per day year-on-year will eventually weigh on oil prices and drag them lower as we approach 2019, in our view,” said the report.
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