JP Morgan Predicts $100 Oil

• JP Morgan’s head of oil and gas research for EMEA: The reality is the chances of oil going toward $100 at this point are higher than three months ago.
• The current situation is fundamentally no different, according to JP Morgan’s analyst, who expects the oil market to swing into a deficit sometime in 2022.

It may sound far-fetched at a time when many are worrying if Brent could rise back to $50 a barrel, but at least one analyst believes the benchmark could not only recoup all that it lost in value since the start of the year but shoot up over $100 a barrel in the observable future.

“The reality is the chances of oil going toward $100 at this point are higher than three months ago,” JP Morgan’s head of oil and gas research for EMEA, Christyan Malek, said as quoted by CNN.

The reason is simple: the cyclical nature of the oil industry. In March, before the coronavirus pandemic really hit, JP Morgan’s analysts issued a note saying the oil industry was entering a supercycle that could see the price of oil hit $190 a barrel by 2025. According to Malek, this is still a distinct possibility.

The forecast is not without a logical basis. The way cyclical industries work is that the industry produces a lot of the commodity when there is high demand for it. Eventually, supply begins to outpace demand for one reason or another. Prices then fall, the industry retreats and shrinks production to limit supply and stimulate higher prices. This brings a deficit of the commodity, which pushes prices up. This cycle repeats once every few years.

The current situation is fundamentally no different, according to JP Morgan’s analyst, who expects the oil market to swing into a deficit sometime in 2022, which would push Brent to $60. This, in turn, will motivate producers to start pumping more crude. The deficit, Malek estimates, could reach 6.8 million bpd by 2025. This is what could cause prices to climb to $100 or more.

“The deficit speaks for itself. That implies oil prices will go through the roof,” Malek told CNN. “Do we think it’s sustainable? No. But could it get to those levels? Yes.”

By Irina Slav for Oilprice.com

Source: https://oilprice.com/Energy/Energy-General/JP-Morgan-Predicts-100-Oil.html

Morgan Stanley Expects $40 Brent By Christmas

Morgan Stanley expects Brent crude to trade at $40 a barrel by the end of the year thanks to the recovery in demand, which has taken off faster than the bank expected.

“We expect demand to rebound to about 97 million barrels per day (bpd) by Q4 as economies come out of lockdown – a significant improvement although still down about 4 million bpd year-on-year,”

Source: https://oilprice.com/Energy/Oil-Prices/Morgan-Stanley-Expects-40-Brent-By-Christmas.html

Oil prices spike above $30 for first time in over a month

Oil prices climbed above $30 for the first time in more than a month Monday as production cuts by the world’s largest producers and a slow return of demand continue to provide support.

West Texas Intermediate crude oil, the U.S. benchmark, gained 8.12 percent to $31.82 per barrel and closed above $30 for the first time since April 8. Brent crude, the international standard, was higher by 7.11 percent at $34.81 a barrel.

WTI futures for June delivery expire Tuesday with prices having seen a sharp reversal from last month’s memorable drop below zero.

Source: https://www.foxbusiness.com/markets/oil-prices-spike-above-30-first-time-over-month

Oil prices rise as production cuts begin worldwide

Key pricing contracts in the North Sea and Russia have rallied in recent days, though there are still concerns that the world is on the brink of filling its storage capacity. Major producers were due to start output cuts on May 1, but some, including Saudi Arabia, are now curbing output early.

Futures rose by almost $2 in New York to around $14 a barrel. Russian oil companies will cut output by about 19% from February levels, the nation’s Energy Minister, Alexander Novak told the Interfax news agency. Even at $10 a barrel, some countries are having difficulty selling their oil, highlighting the collapse in demand globally.

Source: https://www.worldoil.com//news/2020/4/29/oil-prices-rise-as-production-cuts-begin-worldwide