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JPMorgan: Oil price may sink to $65 per barrel

13 November 2014 12:28 (UTC +04:00)

Baku - APA-Economics. JPMorgan Chase & Co has slashed its 2015 Brent price forecast by $33 to $82 per barrel, citing supply pressures in the Atlantic Basin and an apparent inability of OPEC member states to work cohesively to restrain production and rebalance the market, Reuters reported.

The investment bank also lowered its 2016 Brent price forecast to $87.80 per barrel from $120, in a research note dated Nov. 7.

"In the short term, we now expect OPEC to be unable to reach an agreement in its end-November meeting. Consequently, the prospect of oil inventories increasing substantially in excess of seasonal norms will likely pressure prices," JPMorgan analysts David Martin and Upadhi Kabra said.

Assuming no agreement is reached between the OPEC members, Brent prices will likely fall toward $70 per barrel in December, and could sink to $65 per barrel by early January, the analysts said.

The bank said the prospect of prices below $70 a barrel could provide a strong catalyst for OPEC members to resolve their differences in opinion, "albeit perhaps not until the New Year."

JPMorgan said oil market prices are likely to shift in the $80 to $90 a barrel range, because of incremental light sweet barrels primarily coming out of the U.S. shale at notably lower costs, global oil demand growth below non-OPEC supply growth and higher spare capacity within OPEC.