In J.P. Morgan’s last weekly oil report of 2024, which was sent to Rigzone by the JPM Commodities Research team on Thursday, J.P. Morgan analysts highlighted that Brent crude oil “is on track to average $80 per barrel in 2024”, which they pointed out is $3 below their projections from last June.
“We expect the price to decline to $73 in 2025, remaining largely consistent with our 2024 outlook published last November, before slipping to $61 in 2026,” the analysts said in the report.
“Fundamentally, our outlook for Brent oil prices anticipates a shift in the global oil market from a balance in 2024 to a large 1.2 million barrel per day surplus in 2025, followed by another 0.9 million barrel per day surplus in 2026,” they added.
The J.P. Morgan analysts stated in the report that “demand is not the primary concern, as global oil demand growth is expected to slow from 1.3 million barrels per day this year to 1.1 million barrels per day next year, before rebounding to 1.3 million barrels per day in 2026, aligning with long-term historical averages”.
The analysts warned in the report that “the real challenge lies in the excess supply”.
“After stumbling the last few quarters, non-OPEC+ production has returned to growth in 4Q24 and is projected to surge by 1.8 million barrels per day in 2025, driven by large-scale, price-inelastic offshore developments in Brazil, Guyana, Senegal and Norway,” they said.
“In total, five floating production, storage and offloading (FPSO) vessels, with a combined capacity of one million barrels per day, are committed for delivery in 2025,” they added.
“With the explosive growth of U.S. shale fading, U.S. oil liquids production is projected to increase by 670,000 barrels per day next year, with deepwater production expected to surpass shale as the largest source of growth outside of the OPEC alliance,” the analysts went on to state.
“Assuming that [the] OPEC alliance stays put at current production levels through 2025, we expect Brent prices to dip below $70 by year-end, with WTI exiting the year at $64,” they highlighted.
The analysts noted in the report that the central theme of their outlook is that any policies from the incoming Trump administration that could potentially raise oil prices are likely to be secondary to Trump’s primary objective of keeping energy prices low.
Rigzone contacted the Trump transition team for comment on J.P. Morgan’s report. In response, Trump-Vance Transition Spokeswoman Karoline Leavitt said, “families have suffered under the past four years’ war on American energy, which prompted the worst inflation crisis in a generation”.
“Voters re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail, including lowering energy costs for consumers,” Leavitt added.
“When he takes office, President Trump will make America energy dominant again, protect our energy jobs, and bring down the cost of living for working families,” Leavitt continued.
Rigzone has contacted the U.S. Department of Energy and the White House for comment on the Trump transition team’s statement. At the time of writing, neither have responded to Rigzone’s request yet.
A research note sent to Rigzone by the JPM Commodities Research team on December 13 showed that J.P. Morgan expects the Brent crude price to average $74 per barrel across the fourth quarter of this year and first quarter of 2025, $77 per barrel in the second quarter, $73 per barrel in the third quarter, and $69 per barrel in the fourth quarter of 2025.
That note revealed that J.P. Morgan sees the Brent crude price coming in at $64 per barrel in the first quarter of 2026, $63 per barrel in the second quarter, $59 per barrel in the third quarter, and $57 per barrel in the fourth quarter.
According to the note, J.P. Morgan expects the WTI crude price to average $70 per barrel across the fourth quarter of 2024 and first quarter of 2025, $73 per barrel in the second quarter, $69 per barrel in the third quarter, $65 per barrel in the fourth quarter, $60 per barrel in the first quarter of 2026, $59 per barrel in the second quarter, $55 per barrel in the third quarter, and $53 per barrel in the fourth quarter.
In its latest short term energy outlook (STEO), which was released recently, the EIA projected that the Brent spot price will average $80.49 per barrel and the WTI spot price will average $76.51 per barrel in 2024. The EIA forecast in its December STEO that the Brent spot price will come in at $73.58 per barrel next year and that the WTI spot price will average $69.12 per barrel in 2025.
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