JPMorgan warns of a continued surge in oil prices to $150
Oil prices will continue to surge not just in the near term but over the next two to three years, says Christyan Malek. He’s the Global Head of Energy Strategy at JPMorgan.
Malek is bullish on the energy sectorCopy link to section
Malek raised his rating on the global energy space this morning to “overweight” citing an energy “supercycle” that could push Brent prices up to $150 by 2026.
He forecasts the imbalance between supply and demand to hit 7.1 million barrels per day by the end of this decade.
Elevated corporate breakevens, while OPEC’s falling spare capacity generates additional risk premium of ~$20/bbl based on periods in the past that have experienced reduced levels of spare capacity.
Earlier this month, Saudi Arabia – the de facto leader of petroleum exporting countries said it will continue to produce 1.0 million barrels a day less of oil through the remainder of 2023 (read more).
Malek names three oil stocks as top picksCopy link to section
Other reasons cited for the super bullish call on Brent crude – the global benchmark – include Russia that announced an indefinite ban on fuel exports this week.
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Rising demand and limited supply, as per the JPMorgan analyst, could keep inflationary pressures alive and make central banks leave interest rates up for longer that may weigh on capital investments into energy exploration and production.
An “accelerated transition away from hydrocarbons” will also contribute to higher energy prices, Malek added. He named Baker Hughes, Shell PLC (LON: SHEL), and Exxon Mobil Corp (NYSE: XOM) as top picks to play the potential surge in oil prices.
Note that U.S. inflation was up 0.6% last month versus 0.2% in July as Invezz reported here.