Oil prices rose 2% on Monday as demand remains a significant concern. JPMorgan predicts another choppy year for oil in 2024 with uncertainty around OPEC supply cuts versus growth from other crude producers.
Yahoo Finance’s Ines Ferré reports on this and breaks down the oil production levels expected for the next two years.
– Oil coming off of a wild week and prices today jumping 2% ahead of the OPEC meeting this weekend, but demand concerns have outweighed production cuts. Prices are down about 20% from last year, and it could be another bumpy ride in 2024, at least according to J.P. Morgan. Ines Ferre has been following the story for us. Ines.
INES FERRE: Yeah, Josh. And we have seen that this year has been really volatile when it comes to oil. We saw that supply squeeze because of the production cuts from OPEC+ and the unilateral cuts from Saudi Arabia and Russia as well. And then we’ve also seen the resilient demand for coming from places like the US. But it has been flat for the year, down about 17% from the average that we saw in 2022.
Now, as far as 2024, J.P. Morgan analysts are saying that you can expect a bit of more of the same. So J.P. Morgan analysts are predicting that for this year, Brent crude will average $81 per barrel, while for 2024, it will average around $83 per barrel. And then you’re going to see oil ticking down about 10% in 2025.
And Natasha Kaneva, the head of global commodities research at J.P. Morgan wrote a note to clients, and their big reveal was what would happen in 2025 for oil. So first, let’s stick with next year. Demand is expected to tick higher. You’re going to see a supply increase from the non-OPEC+ producers. And the analysts at J.P. Morgan are saying to keep markets balanced, OPEC+ will have to constrain production, continue to do that.
And in 2025, though, you could see a surplus of oil. You’re going to have that EV shift really going into full gear, no pun intended there, and more fuel efficiency going into 2025. Now, the big question is, what will Saudi Arabia do with its unilateral cuts? Those are more than 1 billion of barrel– 1 million barrels per day from Saudi Arabia, and what will Russia do as well.
And if those were to unwind, you could see then oil prices being shifted again in 2025. And you could see in 2024, US producers scaling back on drilling because of lower oil prices. As you mentioned, today we saw up more than 2% for WTI on our YFi Interactive. You’re looking at Brent crude that’s up almost 2%. And this is because OPEC+ is going to be meeting on November 26.
And Reuters had reported on Friday, and you saw a tick up in oil on Friday that sources are saying that OPEC+ could continue with more production cuts going into 2024, guys.
– Ines, thanks so much. Appreciate it.