JPMorgan has reduced its oil price outlook for 2023 and 2024, projecting global supply growth to outpace even a record rise in demand.
The bank lowered its average Brent price forecast for 2023 to $81 per barrel from $90 earlier and West Texas Intermediate (WTI) to $76 a barrel from $84.
For 2024, its Brent forecast fell to $83 from $98 and WTI to $79 from $94.
Brent futures traded at $74.34 on Wednesday morning, while WTI traded at $69.43.
It comes down to JPMorgan’s expectation that global oil supply will grow by 2.2 million barrels per day (bpd) in 2023, ahead of projected demand growth of 1.6 million bpd.
If that came to pass, it would mean record oil consumption of 101.4 million bpd of oil in 2023, driven by higher-than-ever demand in China, India and the Middle East, the bank noted.
"It is becoming increasingly clear that high oil prices over the past two years did exactly what they are supposed to do — incentivize supply," JPMorgan analysts wrote in a note to clients.
This marks a reversal from JPMorgan’s November outlook, which projected that the OPEC+ alliance would succeed in balancing oil markets.
The bank no longer holds that view.
"Even with OPEC's existing 1.16 mbd (million bpd) voluntary cuts extended into 2024, we still project a 0.4 mbd surplus next year," the analysts said.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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