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JP Morgan raises oil price outlook, but trims demand-growth forecast


(Reuters) - Investment on Friday raised its outlook for prices, but lowered its forecast for global crude demand-growth this year amid increasing uncertainty over international trade.

The U.S. said prices for Brent crude, the international benchmark for markets, would average $70 per barrel in both 2018 and 2019, up from an earlier forecast of $65 and $60 per barrel respectively. Brent stood at around $74 on Friday.

"Uncertainty around actual OPEC production increases, current budget constraints and sanction effects could mean prices remain elevated," the bank's European equity research team said in a note.

The Organization of the Exporting Countries in June agreed on modest increases in starting in July but it is not yet clear how those will pan out, while the is set to reimpose sanctions on major in November.

However, the said would be capped by "rising OPEC spare capacity and short-cycle U.S. shale well economics against a muted demand growth-backdrop in 2018/19".

It revised its 2018 demand-growth outlook to 1.2 million barrels per day (bpd) from 1.4 million previously, though its 2019 forecast edged up a touch to 1.1 million bpd from 1 million.

"The global macro outlook, weakness in emerging market currencies, impact of the last rally in oil prices, impact of sanctions on and rising trade uncertainties are all potential risks to oil demand-growth," the bank said.

and have been descending deeper into a tit-for-tat trade war, with steep tariffs slapped on a raft of goods by both sides.

said it expected global to remain robust despite short-term disruptions, forecasting OPEC supply in 2018 at about 32.9 million bpd.

It said non-OPEC supply was expected to increase by 2.2 million bpd year-on-year in 2018 and by 1.7 million bpd in 2019, "driven significantly by the U.S. as well as Canada, Russia, and Brazil".

The bank added that volatility seen in this year would likely to continue.

"We expect continued price fluctuations within a wide $50-80/barrel range, with the strip gravitating lower over the medium-term and a wider Brent/WTI crude differential."

(Reporting by in Bengaluru; Editing by Joseph Radford)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, July 13 2018. 13:17 IST