JP Morgan cuts its 2022 global oil demand outlook by 1 million bpd

Workers walk as oil pumps are seen in the background at the Uzen oil and gas field in the Mangistau region of Kazakhstan November 13, 2021. REUTERS/Pavel Mikheyev

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May 4 (Reuters) – JP Morgan on Wednesday cut its 2022 global oil demand outlook by one million barrels per day (bpd), citing higher oil prices, deteriorating growth prospects and escalating geopolitical tensions.

“We now see total oil demand averaging 100 million bpd, 400,000 bpd below 2019 levels,” the bank said in a weekly note.

JPM maintained its Brent price forecast at $114 per barrel in the second quarter of this year and $104 per barrel for calendar year 2022.

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Oil prices are stuck in a narrow range, with weak global oil demand and strategic reserve releases equalizing rising expectations that Europe may agree to limit oil purchases from Russia, the bank said. .

“With all of these factors canceling each other out, we still expect a balanced market in 2022,” he said.

Oil prices jumped around $5 on Wednesday, taking Brent futures to $110.14 a barrel, as the European Union, the world’s largest trading bloc, announced plans to phase out imports of Russian oil.

JP Morgan noted that Russia’s ability to reroute its oil flows could pose a risk to its forecast and that Russian crude oil would need to be discounted for China to increase its purchases to keep the global market sufficiently supplied.

He also warned that due to tensions in the oil market, the loss of another 1 million bpd could cause oil prices to spike $18 to $35 a barrel above his price target.

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Reporting by Kavya Guduru in Bengaluru; edited by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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Felix J. Dixon