JP Morgan latest crude oil price forecast remains on the upside

8 October 2011 8 October 2011

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JP Morgan said on Friday it sees continued upside price risks conducive to oil prices moving to $130 per barrel for 2013 from ongoing geopolitical issues, low spare capacity, the potential for stock building, and currency related issues.

Oil Price Forecast – 2013

The bank forecasts the price of Europe’s Brent oil for 2013 to average out at $121.25 per barrel and forecasts the 2013 average WTI oil price at $114.25 per barrel.

“Our analysis suggests that supply constraints will again be reached by the end of 2013, driving a quarterly rise in our ICE Brent price forecast to $130 per barel.” it said.

Oil Price Forecast – 2012

JP Morgan has maintained its price projection of $115 a barrel for Brent crude oil, and $97.50 a barrel for WTI through 2012.

Earlier this week, Goldman Sachs cut its 2012 Brent crude oil price forecast, on growing worries that the European financial crisis would restrain economic growth and curb global fuel demand.

Goldman Sachs trimmed its 2012 Brent oil price estimate to $120 a barrel from $130 and cut its forecast for US WTI crude oil price to $109 from $123.50.

Goldman Sachs had the highest Brent 2012 forecast of $130 a barrel a recent monthly oil poll, well above an average of $106.80 a barrel expected in 2012.

JP Morgan – Top Oil Stock Picks

Meanwhile, JP Morgan has adopted a more positive stance toward the major US oil producers sector, while also upgrading several stocks within the sector in a research note released on Thursday.

Within the integrated oils sector, JP Morgan’s top picks are Nexen, Hess, Talisman Energy and Occidental Petroleum. The bank’s analysts think these companies offer the most attractive combinations of upside to price targets, downside protection, upcoming catalysts and growth in production.

“We stress that we would not short these names, but we would lock in recent outperformance, as we believe they have less to offer than the peers in terms of share price performance, underlying growth and valuations appeal in the near term.” the report said.

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