Price of West Texas Intermediate crude will remain $2 a barrel below Brent
JPMorgan Chase & Co raised its average 2011 forecast for Brent crude to $91.75 from $84.50 a barrel, following the US Federal Reserve’s announcement of additional asset purchases, or quantitative easing.
In a note on Thursday, analysts at JPMorgan led by Lawrence Eagles in New York said: “Although there has already been a significant currency and commodity price shift in anticipation of QE2, we believe there remains a strong likelihood of further dollar weakness, which will prove supportive to the oil price.”
The price of West Texas Intermediate crude will remain $2 a barrel below Brent, the analysts said, raising their 2011 WTI forecast to $89.75 a barrel from $82.50. JPMorgan raised its fourth quarter 2010 estimates to $88 a barrel from $83 a barrel for Brent, and to $86 from $81 for WTI.
The forecasts for Brent “implicitly target a spike to $100 over the next six months,” according to the report.
The analysts said: “But it is important to remember that OECD economies remain fragile, and should the oil price spike too high, too quickly, that could have a circular impact in terms of global GDP growth and oil demand.”