J.P. Morgan and Standard Chartered have revealed their latest Brent oil price forecasts in two separate reports sent to Rigzone recently.
In a report sent to Rigzone on Tuesday, J.P. Morgan projected that the Brent crude price will average $83 per barrel in 2024 and $75 per barrel in 2025. The company forecast in the report that the commodity will average $79 per barrel in the first quarter of 2024, $84 per barrel across the second and third quarters, $85 per barrel in the fourth quarter of this year, $82 per barrel in the first quarter of 2025, $77 per barrel in the second quarter, $73 per barrel in the third quarter, and $69 per barrel in the fourth quarter.
A J.P Morgan report published in November last year, which was also sent to Rigzone, revealed that the company expected the Brent crude price to come in at $83 per barrel this year and $75 per barrel next year.
“After dropping by an estimated 17 percent in 2023, Brent oil price is expected to remain largely flat in 2024 and edge further down 10 percent in 2025,” J.P. Morgan analysts stated in that report.
In a report sent to Rigzone on Wednesday, Standard Chartered projected that the ICE Brent price will average $92 per barrel in the first quarter of 2024, $94 per barrel in the second quarter, $98 per barrel in the third quarter, and $106 per barrel in the fourth quarter.
The report anticipated that ICE Brent would come in at $107 per barrel in the first quarter of 2025, $103 per barrel in the second quarter, and $109 per barrel overall in 2025.
“While physical traders seem [to] have become more convinced of the underlying strength of the oil market, that view has been slower to spread to financial traders of oil,” Standard Chartered analysts stated in the report.
“Top-down concerns based on the economic outlook and potential currency movements appear to remain dominant among this group, although we also detect greater interest in oil fundamentals than at the start of the year,” they added.
“However, with many of the more fundamentally driven funds currently sitting on the sidelines, there have been periods intra-day when price movements appear to have been generated by algorithmic trading almost in isolation,” they continued.
The Standard Chartered analysts noted in the report that the move higher in prices has been relatively slow, “even with the twin tailwinds of the strong year on year improvement in overall balances and strong OPEC+ compliance with both targets and voluntary cuts”.
“The recent pattern has been a slow upward trend through a succession of strong technical resistance levels, interlaced with a series of large rapid intra-day movements that we think have been primarily driven by algorithmic traders,” the analysts said in the report.
“The resultant upside congestion on price charts has been particularly evident over the past week; the intra-day high for front-month Brent has been in a narrow $83.60-83.66 per barrel range on four of the past five trading days, and the intra-day high for all the past seven trading days has been within a $83.24-83.66 per barrel range,” they added.
“While both Brent and WTI have reached three-month settlement highs over the past week, the current drift higher with low volatility suggests the market is still somewhat disconnected from both fundamentals and geopolitical risk,” the analysts went on to state.
The Standard Chartered analysts also highlighted in the report that Standard Chartered’s machine learning oil price model, which has been dubbed SCORPIO, “indicates a week on week fall of $1.75 per barrel for Brent settlement on February 26, with crude inventories accounting for a decrease of $0.71 per barrel according to the decomposition”.
“Last week SCORPIO indicated a Brent settlement price of $83.60 per barrel on February 19; the actual price was $83.56 per barrel, adding to SCORPIO’s recent strong run,” the analysts added in the report.
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