JP Morgan forecasts $100/bbl WTI by year-end - Oct 5
Posted: Wed Oct 05, 2022 2:24 pm
Natasha Kaneva at JP Morgan repeats her long-standing 4Q22 price target of $100/bbl, and says that to realize it, five key forecasted conditions need to play out:
1. Demand needs to bounce 900,000 bpd yoy in 4Q, most of that from gas to oil substitution in Europe
2. Sanctions on Russia need to constrain supply by 600,000 bpd;
3. Saudi Arabia production needs to normalize from 11 million bpd in September to a sustainable 10.6-10.7 mbd pace;
4. US SPR releases need to end in October or sooner; and
5. The US dollar needs to stabilize.
Kaneva concludes that if four of the above supply-demand conditions materialize, the bank's models suggest a return to oil supply deficits in 4Q22 as supply declines (lower Russian and Saudi production and the end of SPR releases) and demand is supported by incremental gas to oil switching. Adding a stable US dollar to the deficit should result in prices once again re-testing $100 later in the quarter, according to JPMorgan.
Read more: https://www.zerohedge.com/markets/jpmor ... ns-are-met
1. Demand needs to bounce 900,000 bpd yoy in 4Q, most of that from gas to oil substitution in Europe
2. Sanctions on Russia need to constrain supply by 600,000 bpd;
3. Saudi Arabia production needs to normalize from 11 million bpd in September to a sustainable 10.6-10.7 mbd pace;
4. US SPR releases need to end in October or sooner; and
5. The US dollar needs to stabilize.
Kaneva concludes that if four of the above supply-demand conditions materialize, the bank's models suggest a return to oil supply deficits in 4Q22 as supply declines (lower Russian and Saudi production and the end of SPR releases) and demand is supported by incremental gas to oil switching. Adding a stable US dollar to the deficit should result in prices once again re-testing $100 later in the quarter, according to JPMorgan.
Read more: https://www.zerohedge.com/markets/jpmor ... ns-are-met