In J.P. Morgan’s final weekly oil report of 2024, which was despatched to Rigzone by the JPM Commodities Analysis group on Thursday, J.P. Morgan analysts highlighted that Brent crude oil “is on monitor to common $80 per barrel in 2024”, which they identified is $3 beneath their projections from final June.
“We anticipate the worth to say no to $73 in 2025, remaining largely in keeping with our 2024 outlook revealed final November, earlier than slipping to $61 in 2026,” the analysts stated within the report.
“Basically, our outlook for Brent oil costs anticipates a shift within the world oil market from a steadiness in 2024 to a big 1.2 million barrel per day surplus in 2025, adopted by one other 0.9 million barrel per day surplus in 2026,” they added.
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The J.P. Morgan analysts acknowledged within the report that “demand is just not the first concern, as world oil demand progress is predicted to gradual from 1.3 million barrels per day this 12 months to 1.1 million barrels per day subsequent 12 months, earlier than rebounding to 1.3 million barrels per day in 2026, aligning with long-term historic averages”.
The analysts warned within the report that “the actual problem lies within the extra provide”.
“After stumbling the previous couple of quarters, non-OPEC+ manufacturing has returned to progress in 4Q24 and is projected to surge by 1.8 million barrels per day in 2025, pushed by large-scale, price-inelastic offshore developments in Brazil, Guyana, Senegal and Norway,” they stated.
“In whole, 5 floating manufacturing, storage and offloading (FPSO) vessels, with a mixed capability of 1 million barrels per day, are dedicated for supply in 2025,” they added.
“With the explosive progress of U.S. shale fading, U.S. oil liquids manufacturing is projected to extend by 670,000 barrels per day subsequent 12 months, with deepwater manufacturing anticipated to surpass shale as the biggest supply of progress exterior of the OPEC alliance,” the analysts went on to state.
“Assuming that [the] OPEC alliance stays put at present manufacturing ranges by 2025, we anticipate Brent costs to dip beneath $70 by year-end, with WTI exiting the 12 months at $64,” they highlighted.
The analysts famous within the report that the central theme of their outlook is that any insurance policies from the incoming Trump administration that might doubtlessly elevate oil costs are prone to be secondary to Trump’s main goal of conserving power costs low.
Rigzone contacted the Trump transition group for touch upon J.P. Morgan’s report. In response, Trump-Vance Transition Spokeswoman Karoline Leavitt stated, “households have suffered underneath the previous 4 years’ warfare on American power, which prompted the worst inflation disaster in a technology”.
“Voters re-elected President Trump by a powerful margin giving him a mandate to implement the guarantees he made on the marketing campaign path, together with decreasing power prices for customers,” Leavitt added.
“When he takes workplace, President Trump will make America power dominant once more, shield our power jobs, and convey down the price of dwelling for working households,” Leavitt continued.
Rigzone has contacted the U.S. Division of Vitality and the White Home for touch upon the Trump transition group’s assertion. On the time of writing, neither have responded to Rigzone’s request but.
A analysis notice despatched to Rigzone by the JPM Commodities Analysis group on December 13 confirmed that J.P. Morgan expects the Brent crude worth to common $74 per barrel throughout the fourth quarter of this 12 months and first quarter of 2025, $77 per barrel within the second quarter, $73 per barrel within the third quarter, and $69 per barrel within the fourth quarter of 2025.
That notice revealed that J.P. Morgan sees the Brent crude worth coming in at $64 per barrel within the first quarter of 2026, $63 per barrel within the second quarter, $59 per barrel within the third quarter, and $57 per barrel within the fourth quarter.
In line with the notice, J.P. Morgan expects the WTI crude worth to common $70 per barrel throughout the fourth quarter of 2024 and first quarter of 2025, $73 per barrel within the second quarter, $69 per barrel within the third quarter, $65 per barrel within the fourth quarter, $60 per barrel within the first quarter of 2026, $59 per barrel within the second quarter, $55 per barrel within the third quarter, and $53 per barrel within the fourth quarter.
In its newest quick time period power outlook (STEO), which was launched lately, the EIA projected that the Brent spot worth will common $80.49 per barrel and the WTI spot worth will common $76.51 per barrel in 2024. The EIA forecast in its December STEO that the Brent spot worth will are available at $73.58 per barrel subsequent 12 months and that the WTI spot worth will common $69.12 per barrel in 2025.
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