SINGAPORE – JPMorgan says crude oil prices could rise further as oil continues to rise sharply so far this year.
It comes against the backdrop of an improving global outlook as major economies continue their ongoing coronavirus vaccination campaigns.
“I think there is room for oil prices to go a little bit higher in this environment, but you know, I’m not thinking about $ 80 or $ 90 a barrel. Maybe it’s going to be $ 5 or so from here. $ 10 more up, “Kerry Craig, global market strategist at JPMorgan Asset Management, told CNBC’s” Street Signs Asia “on Friday.
In the afternoon of Friday’s Asian trading hours, international benchmark futures on Brent crude oil were at $ 62.91 a barrel. US crude oil futures changed hands at $ 59.34 a barrel. Both Brent and West Texas Intermediate crude oil futures are each up more than 20% so far by 2021.
Oil prices have moderated in recent days after rising to their highest level in more than a year.
This week alone, a deadly winter storm in the southern U.S. resulted in days of power outages in Texas, devastating the state’s energy infrastructure and taking millions of barrels a day of oil production offline. Energy prices shot up as a result of this development.
Main drivers for higher oil prices
According to Craig, there are two things likely to boost oil prices.
First, demand for oil is expected to pick up as the global economy recovers from the blow of the coronavirus pandemic, he said. However, that will be “limited to a certain extent” because international travel is unlikely to return soon. Travel is a “major source of demand,” he added.
On the supply side, he said, “We still rely on those OPEC + members to keep that supply relatively limited and I think there’s still a question about that in terms of the amount of supply coming in relative to demand.”
OPEC and its allies, collectively known as OPEC +, have sought to navigate a historically tumultuous period including an unparalleled collapse in oil prices and a major shock in fuel demand amid the pandemic.
– CNBC’s Sam Meredith, Jeff Cox and Pippa Stevens contributed to this report.
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