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Year End Crude at 86$/bbl Amid Demand Destruction from High Prices: JPM

OIL

JP Morgan maintains an end of year crude oil target of 86$/bbl amid demand destruction due to high prices.

  • Brent is forecast to average 85$/bbl in Q4 2023 and 83$/bbl in H1 2024.
  • “Fuel prices may be closer to consumers’ pain threshold than inflation-adjusted prices might suggest.”
  • “Global oil stock draws have ended” with a surge in oil product stocks offsetting a decline in crude in early September. Crude backwardation and physical crude differentials for Atlantic Basin grades should soften with the move towards a slight surplus in the final four months of the year.
  • Demand restraint is visible in US, Europe, and some EM countries due to rising oil prices. Higher earning US workers are spending about 6% of income filling fuel tanks and California is seeing “eye-popping prices” after a 30% surge since June.
  • Slower but healthy demand growth is expected in Q4.
Energy BulletsCommodities
Energy BulletsCommodities

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