WTI crude oil prices may reach $100 per barrel in the upcoming year due to reduced incentives for producers to increase production, according to JP Morgan’s note cited by Forexlive.
JP Morgan estimates that the current equilibrium price for WTI oil, the U.S. benchmark, stands at approximately $70 per barrel. A price of $60 per barrel for WTI Crude is considered insufficient to stimulate production, potentially leading to a spike towards $100 per barrel, as noted by Forexlive.
Earlier on Thursday, WTI Crude prices rose by 0.7% to $83.45 per barrel, driven by a larger-than-expected drawdown in U.S. crude inventories and increasing expectations of a Federal Reserve interest rate cut in September.
After a sluggish start this week due to concerns over China’s oil demand, prices rebounded on Wednesday following the Energy Information Administration‘s report showing a 4.9 million barrel decrease in commercial crude stocks for the week ending July 12.
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This figure closely matched estimates from the American Petroleum Institute, which earlier reported a 4.44 million barrel drawdown for the same period, amidst strong seasonal demand.
U.S. crude oil inventories are currently about 5% below the five-year average for this time of year.
Financial institutions and analysts anticipate strong support for oil prices in the $80s range during the third quarter, traditionally a period of peak demand in the northern hemisphere.
For instance, ING forecasts Brent crude to average $88 per barrel in the third quarter of 2024, with a slight decline to $80 per barrel for the entire year 2025. However, the main risk to this outlook remains whether the OPEC+ alliance will continue its current production cuts, potentially extending the market deficit into 2025.