JP Morgan has lower its outlook for oil, predicting that Brent crude costs will common $73 a barrel in 2019 — down from the funding financial institution’s earlier forecast of $83.50 a barrel.
Scott Darling, head of Asia-Pacific oil and fuel at JP Morgan advised CNBC that the funding financial institution just lately revised its outlook partially on account of North American provide ramping up within the second half of subsequent yr. JP Morgan expects the value of Brent, the worldwide benchmark for oil, to go towards $64 in 2020.
Demand development will weigh, notably after the Organization of the Petroleum Exporting Countries (OPEC) agreed to ramp up production earlier this year, he mentioned.
The market is now centered on the group’s subsequent assembly on December 6 for steerage. Darling mentioned OPEC wants to chop oil manufacturing by 1.2 million barrels a day for the entire of subsequent yr to steadiness the oil market.
Crude oil costs have seen ups-and-downs this yr, with costs spiking to multi-year highs in October on account of Trump’s resolution to reimpose sanctions on Iran. Sanctions on the third-biggest producer in OPEC has put upward strain on oil costs all through a lot of the yr.
Main crude oil benchmarks spiked to four-year highs one month earlier than the sanctions went into power, however that rally has since unwound spectacularly. Oil costs have plunged 30 p.c since early October, dragged decrease by a broader market sell-off and rising consensus that provide will outstrip demand subsequent yr.
“U.S. politics has performed an element …(however) it is nonetheless been supply-demand pushed,” mentioned Darling.
His feedback got here after President Donald Trump on Wednesday doubled down on his protection of Saudi Arabia, thanking the dominion for helping to keep a lid on oil prices, even amid bipartisan criticism for his assist for Riyadh after the killing of journalist Jamal Khashoggi.
The Trump administration has relied on Saudi Arabia to hike output — and persuade different producers to pump extra oil — with a purpose to offset the inflationary influence of its hawkish Iran coverage.
— CNBC’s Tom DiChristopher contributed to this report.