JP Morgan bearish on oil prices in 2025, predicts OPEC+ will maintain current production levels for "at least another year" https://boereport.com/2024/09/05/jpmorgan-sees-opec-holding-output-steady-for-another-year/
JPMorgan sees OPEC+ holding output steady for another year
September 5, 20244:48 PM
JPMorgan expects OPEC+ to maintain its current production levels for at least another year, leading to an average price of $75 for Brent crude in 2025, JP Morgan said in a note on Thursday.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, on Thursday said they agreed to delay a planned oil output increase for October and November and could further pause or reverse the hikes if needed.
The move came as Brent oil prices held at a 14-month low below $73 a barrel on worries about demand in the U.S. and China and a likely rise in supplies out of Libya.
JPMorgan said the opportunity to phase out production cuts is now closed and sees prices dipping into the low $60s by the end of 2025.
“$60 is not a good price for neither producers nor consumers, and OPEC would need to cut 1 million barrels per day (mbd) deeper, were the alliance to adhere to market management,” the bank said.
The market is now seeking a price point that will deter OPEC+ from introducing unneeded supply due to significantly softer demand anticipated in 2025, JPMorgan said.
Reflecting the recent slide in oil prices, the bank lowered its 2024 fourth quarter forecast for oil prices to $80 from $85 a barrel.29dk2902l
(Reporting by Anmol Choubey in Bengaluru; Editing by Sonali Paul)
JP Morgan bearish on oil price, predicts further OPEC+ production cut extension
JP Morgan bearish on oil price, predicts further OPEC+ production cut extension
Last edited by cmm3rd on Fri Sep 06, 2024 9:21 am, edited 1 time in total.
Re: Morgan Stanley bearish on oil price, predicts further OPEC+ production cut extension
Comments from HFI Research on Sept 6
I've been through some turbulent times in my years of covering the oil markets, but the recent bout of bearishness is up there in terms of magnitude. We've had some interesting events unfold this week, and despite all of these mildly positive developments, WTI can't even break $70/bbl. Either the fundamentals just no longer matter, or sentiment is just so bearish that nothing will shake momentum in the near term.
Take a step back a minute and look at what happened:
> US commercial crude inventories are sitting at 5-year lows.
> Implied US oil production has flatlined since Q4 2022. < As I have posted here many times, U.S. oil production cannot increase at the current level of active drilling rigs. We are not completing enough new wells to offset the decline of existing wells. Yet IEA keeps telling the market that U.S. oil production is going to increase into year end.
> The 8 countries that voluntarily cut production are extending the production cuts until December 2024. OPEC+ crude exports also remain low. < While this gets a lot of attention, OPEC+ was only going to increase production quotas by 180,000 bpd. That is a tiny percentage of global oil demand.
> Global oil demand, while China remains weak, continues to show growth y-o-y. < This is happening primarily because oil demand growth in India is offsetting the decline in China.
> Finally, Libya production outage continues, and crude exports are now being impacted, which would reduce global light crude supplies.
And yet, despite all of these things we mentioned, WTI still trades below $70/bbl, and market sentiment has never been more bearish.
-------------------------------
It will be interesting to see what happens when the Fed lowers interest rates. We are a spark away from war with Iran.
I've been through some turbulent times in my years of covering the oil markets, but the recent bout of bearishness is up there in terms of magnitude. We've had some interesting events unfold this week, and despite all of these mildly positive developments, WTI can't even break $70/bbl. Either the fundamentals just no longer matter, or sentiment is just so bearish that nothing will shake momentum in the near term.
Take a step back a minute and look at what happened:
> US commercial crude inventories are sitting at 5-year lows.
> Implied US oil production has flatlined since Q4 2022. < As I have posted here many times, U.S. oil production cannot increase at the current level of active drilling rigs. We are not completing enough new wells to offset the decline of existing wells. Yet IEA keeps telling the market that U.S. oil production is going to increase into year end.
> The 8 countries that voluntarily cut production are extending the production cuts until December 2024. OPEC+ crude exports also remain low. < While this gets a lot of attention, OPEC+ was only going to increase production quotas by 180,000 bpd. That is a tiny percentage of global oil demand.
> Global oil demand, while China remains weak, continues to show growth y-o-y. < This is happening primarily because oil demand growth in India is offsetting the decline in China.
> Finally, Libya production outage continues, and crude exports are now being impacted, which would reduce global light crude supplies.
And yet, despite all of these things we mentioned, WTI still trades below $70/bbl, and market sentiment has never been more bearish.
-------------------------------
It will be interesting to see what happens when the Fed lowers interest rates. We are a spark away from war with Iran.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group