JP Morgan predicts Brent crude oil prices of $73 a barrel next year, some 12.6% below its previous forecast of $83.50 a barrel, the bank’s head of Asia-Pacific oil and gas told CNBC Thursday.
Brent crude is an international benchmark for oil trading and now trades at around $63 a barrel. Its price is volatile because so many different players try to influence its price and it is an easily tradable and storable commodity. Record production this year in the United States and high production elsewhere have helped to drive prices down, despite growing overall global demand.
The Organization of the Petroleum Exporting Countries (OPEC) has kept production high partly to compensate for American sanctions against Iran, but it has a meeting on December 6th to set its next production targets. It could decide to cut production to force buyers to use more reserves, thereby driving up the price. Bloomberg oil strategist Julian Lee predicts that non-OPEC partners such as Russia and Mexico may not cooperate with a possible cartel-driven cut, as they have other times.
The U.S. Energy Information Administration’s November 6th forecast for 2019 is $72 a barrel for Brent crude.