Source: Caixin.
At last Sunday's ministerial meeting, OPEC+ slightly eased its previous production reduction policy and agreed to gradually lift some production reduction measures from October, a decision that caught the market off guard and led to a cumulative drop of nearly 5% in international oil prices on Monday and Tuesday. JPMorgan analysts believe that the recent fall in international oil prices is only temporary and that oil prices will rise again in the coming months as demand rises.
JPMorgan analysts believe that the recent decline in international oil prices is only temporary, and oil prices will rise again in the coming months as demand increases.
At last Sunday's ministerial meeting, OPEC+ slightly eased its previous production reduction policy and agreed to gradually lift some production reduction measures from October, a decision that caught the market off guard and led to a cumulative drop of nearly 5% in international oil prices on Monday and Tuesday. Previously, the market had expected the OPEC+ production reduction agreement to continue into the fourth quarter of this year.
However, international oil prices rebounded somewhat in the past two trading days. On Thursday, Brent crude oil futures rose 1.89% to $79.89 a barrel and WTI crude oil futures rose 2.01% to $75.56 a barrel.
OPEC+ is an alliance of the Organization of the Petroleum Exporting Countries (OPEC) and countries led by Russia. The alliance's crude oil output accounts for more than 40% of global crude oil production. Currently, OPEC+ is implementing a production reduction agreement of about 2.2 million barrels per day.
In a report on Thursday, Natasha Kaneva, global head of commodity strategy at JPMorgan, wrote: "The decrease in summer inventories should be enough to push Brent crude oil back into the $80-90 per barrel range before September."
Kaneva pointed out in the report that while the additional supply in the market will be detrimental to oil prices, oil production in some major OPEC countries has already far exceeded their allocated quotas and demand growth is still healthy."
"We expect demand to pick up seasonally soon, with product oil and crude oil demand expected to increase by 2.5 million barrels per day and 4 million barrels per day, respectively, between April and August," Kaneva said.
However, Kaneva and her team expect that international oil prices may fall next year due to increased supply of oil outside of OPEC+ and a slowdown in demand."
Kaneva wrote that with the complete disappearance of the demand rebound after the new crown epidemic, coupled with the improvement of energy efficiency and the popularity of electric vehicles, global oil demand growth may fall from 1.4 million barrels per day this year to 1 million barrels per day in 2025.
"Our price outlook is that the average price of Brent crude oil in 2025 will be $75 per barrel, a significant drop from $83 per barrel in 2024, and will reach $64 per barrel by the end of 2025," she added.
Editor/Lambor