JP Morgan explains why oil prices could hit $100 this year

Forexlive, a foreign exchange trading platform, cited a JPMorgan report that WTI crude prices could surge to $100 a barrel next year as producers' incentive to increase output wanes.The investment bank forecasts that...United StatesThe equilibrium price of WTI crude oil is currently around $70 per barrel.

(One-hour chart of crude oil prices)

according toforeign exchange trading platformAccording to the report, the price of $60/barrel WTI crude oil is too low to stimulate production, which could cause oil prices to surge to $100/barrel.

On Thursday (July 18), WTI crude oil was quoted at $81.46 a barrel, an increase of 0.02%. The rise in oil prices was driven by higher-than-expected U.S. crude oil inventories and the increased likelihood that the Federal Reserve will announce its first interest rate cut in September.

Oil prices, which had been sluggish at the start of the week due to concerns about global oil demand, rose on Wednesday morning after the weekly inventory report released by the U.S. Energy Information Administration (EIA) showed that U.S. commercial crude inventories fell by 4.90 million barrels for the week ending July 12.

That is roughly in line with estimates provided by the American Petroleum Institute, which on Tuesday reported that inventories fell by 4.44 million barrels in the week ending July 12 during the strong demand season.

Current U.S. crude oil inventories are about 5% below their five-year average.

Banks and analysts expect oil prices to find strong support in the $80-a-barrel range in the third quarter ahead of the peak demand season in the northern hemisphere.

ING, for example, forecasts Brent crude at $88 a barrel in the third quarter of 2024, falling to $80 a barrel for all of 2025. The key risk to this outlook is that if the OPEC + group decides to maintain across-the-board production cuts, this could extend the market deficit into 2025.