Oil prices headed lower this year and next, J.P. Morgan forecasts

Oil prices headed lower this year and next, J.P. Morgan forecasts

Kazempour Ardebili made the comments in response to reports that the United States government had quietly asked Saudi Arabia and some other OPEC producers to increase oil production by about one million barrels a day.

He said, "It's insane and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran's export due to their Illegal sanction on Iran and Venezuela", and he added that "No one in OPEC will act against two of its founder members; the US tried it last time against Iran, but oil prices got to $140 a barrel".

Contradicting conventional wisdom, J.P. Morgan says crude oil prices are heading for a downturn later this year and will sink even lower next year as supply and demand fundamentals weaken.

But many European companies are already severing ties with Tehran for fear of facing secondary sanctions from the United States, which could mean losing access to the USA dollar clearing system.

Next week's discussion between Russian Minister of Energy Alexander Novak and Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid al-Falih in Moscow might be a prelude to a broader gathering of OPEC members and allied producers later this month.

"After Saudi Arabia and Russian Federation made the suggestion that Opec starts lifting output in the second half, the market has been on its heels", said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. "In the end, OPEC will make sure to tread carefully". U.S. West Texas Intermediate (WTI) crude futures recovered some earlier losses to trade 61 cents lower at $65.33. Total volume traded was about 15 percent below the 100-day average.

Oil prices headed lower this year and next, J.P. Morgan forecasts
Oil prices headed lower this year and next, J.P. Morgan forecasts

Brent futures for August settlement slid US$0.86 to end the session at US$76.46 on the London-based ICE Futures Europe exchange.

Some Opec members are reluctant to relax output caps that have been in place since the start of 2017.

Against that backdrop, Russian President Vladimir Putin is scheduled to meet Saudi Crown Prince Mohammed bin Salman on Thursday next week.

"They're all seeming to push back on the Saudis' push to raise production", said John Kilduff, a partner at Again Capital Management in NY. The vessel had been waiting since February to load Venezuelan Boscan heavy crude, according to the data.

Hedge funds and other money managers cut their bullish bets on U.S. crude futures in the week ended June 5, the U.S. Commodity Futures Trading Commission (CFTC) said. "The US tried it last time against Iran, but oil prices got to $140 a barrel", he said.

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