JPMorgan oil forecast
"Our base case is that this next move in crude is down, since the market should remain quiet oversupplied into early spring," JPMorgan analysts say.
"More specifically, US production growth will probably not slow meaningfully until mid-year even given a collapsing rig count; OPEC production should rise this quarter as temporary outages in Kuwait and Iraq reverse; and demand should weaken through March due to refinery maintenance plus an average global economic expansion (only Euro area GDP growth appears to be lifting)," JPM adds.
"So while we are quite confident that crude has entered its multi-month bottoming-out phase due to signs of adjustment in non-OPEC markets like US shale, we still think prices spend the rest of Q1 more in the $40s than in the $50s or $60s ," JPM argues. Hence JPM is reluctance to purchase commodity currencies (particularly the oil ones) or adjust bearish forecasts in response to this month's oil market developments as these price levels, according to JPM, look unsustainable.
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