Oil prices could rise to $125 a barrel next year and reach $150 a barrel in 2023, analysts at J.P.Morgan Chase & Co. forecast.
This is due to the fact that OPEC+ has a “strong hand on the pulse” of the oil market. Participants in the agreement have regained a favorable position “which they will defend by keeping inventories low, balancing the market” and other measures, experts believe the bank.
On Friday the quotations of benchmark WTI and Brent contracts slumped 13% and almost 12% respectively – the largest daily declines since the first days of the COVID-19 pandemic.
This panic sentiment was triggered by a new strain of the omicron coronavirus. Investors fear that countries will reintroduce restrictions and this will cause a slowdown in the global economy. All this was superimposed on sluggish trading on Friday, the day after Thanksgiving in the US.
JPMorgan believes OPEC+ members are likely to slow the rate of production build-up early next year and are unlikely to increase supply unless oil prices have “strong support”.
Analysts say the industry-wide underinvestment will make it difficult for OPEC+ to deliver a monthly production increase of more than 250,000 bpd after the expected pause to ramp up production (due to the discovery of a new strain of coronavirus), Finversia writes.
They estimate that OPEC+’s real spare capacity in 2022 will be around 2m b/d, significantly below the consensus estimate of 4.8m b/d.
JPMorgan’s office on Park Avenue in New York. Photo: Yandex Images
