Brent crude prices will reach $125 per barrel next year and $150 in 2023, as OPEC+ producers won’t be able to crank up production, J.P. Morgan analysts predict.
“OPEC+ is not immune to the impacts of underinvestment…. We estimate 'true’ OPEC spare capacity in 2022 will be about 2 million barrels per day (43%) below consensus estimates of 4.8 million,” write the analysts led by Christyan Malek.
“While we believe a three-month pause to 400,000 barrel-per-day monthly increments is needed during the first half of 2022 to balance the market (and potentially a cut pending impact of new COVID variants), the group will struggle to deliver monthly growth of more than 250,000 barrels per day once reinstated.
Last week, PresidentJoe Biden announced the release of50 million barrels of oil from the country’s strategic petroleum reserves stockpile in a move meant to quell rising gas prices at the pumps.
U.S. January crude futures dropped 13% from Wednesday through Friday, ending last week at $68.15 per barrel. But they rebounded 2% Monday to $69.60.
Oil stocks Exxon Mobil (XOM) and Chevron (CVX) each firmed less than 0.6% Monday.