7 Apr 2015
Brent might move higher to $59 this year – JP Morgan
FXStreet (Barcelona) - Jan Loeys of JP Morgan, revises the forecast for Brent prices to the upside, anticipating a move higher towards $59 in 2015 and $62 in 2016.
Key Quotes
“Brent has stayed above $50 for the past two months as oil markets have been reacting faster to the drop in prices, through lower production and higher consumption, than we had expected.”
“US shale oil production, which has grown dramatically in recent years, should not slow rapidly as capex and the number of rigs are cut. Increased Iraqi and Iranian oil production in 2015/16 should offset this partly.”
“Iran and P5+1 agreed on a deal this week, with terms to be finalized by June 30. If this deadline is met with removal of sanctions, then Iran can likely increase output by Q4.”
“On the demand side, oil consumption in select EMs has been growing faster recently. Global oil demand is also seasonally stronger in H2, which should help absorb the market surplus from H1. Consequently, we have raised our Brent price forecasts to $59 in 2015 and $62 in 2016.”
“2Q2015 Brent price forecast at $57/bbl is above the current price and 1Q2015 average. Near term, prices may fall if Libyan output increases significantly following reports that major oil ports are expected to reopen.”
“Similarly, refineries undergoing maintenance in Asia and Europe may suppress crude demand more than we expect. However, the potential for an escalation in the Middle East conflict centered on Yemen and geopolitical risks in other oilexporting countries remain high, presenting upside risks to prices.”
Key Quotes
“Brent has stayed above $50 for the past two months as oil markets have been reacting faster to the drop in prices, through lower production and higher consumption, than we had expected.”
“US shale oil production, which has grown dramatically in recent years, should not slow rapidly as capex and the number of rigs are cut. Increased Iraqi and Iranian oil production in 2015/16 should offset this partly.”
“Iran and P5+1 agreed on a deal this week, with terms to be finalized by June 30. If this deadline is met with removal of sanctions, then Iran can likely increase output by Q4.”
“On the demand side, oil consumption in select EMs has been growing faster recently. Global oil demand is also seasonally stronger in H2, which should help absorb the market surplus from H1. Consequently, we have raised our Brent price forecasts to $59 in 2015 and $62 in 2016.”
“2Q2015 Brent price forecast at $57/bbl is above the current price and 1Q2015 average. Near term, prices may fall if Libyan output increases significantly following reports that major oil ports are expected to reopen.”
“Similarly, refineries undergoing maintenance in Asia and Europe may suppress crude demand more than we expect. However, the potential for an escalation in the Middle East conflict centered on Yemen and geopolitical risks in other oilexporting countries remain high, presenting upside risks to prices.”