PremiumU.S. analysts downgrade oil prices forecasts on supply risks

Azerbaijan, Baku, Feb. 22 / Trend A.Badalova /

Analysts at the U.S. bank JP Morgan downgrade the forecasts on the world oil prices for 2012 and 2013 on the supply amid the risks in key producing countries.

According to the news forecasts, Brent average price will amount to $118 per barrel in 2012 and $125 per barrel in 2013 compared to $112 and $121 per barrels accordingly.

"We remain alert to the potential to grow supply at a much faster rate, but ongoing decline in mature areas, supply risks in key producing countries together with the underperformance of some new frontier areas leave us to feel that it will be a greater risk in 2013/2014 than this year," JP Morgan's analysts said in a report.

According to the analysts, the oil market faces the risk of a short-term correction through weakening seasonal demand, falling margins, policy and economic developments.

However, they believe in such a correction, "should it occur, is likely to be temporary, with geopolitical issues in Iran, Syria, Sudan/South Sudan, Nigeria and elsewhere creating increased demand for inventory, and providing greater leeway for OPEC to manage a price fall."

Analysts also lifted their expectations for the possible price range over the course of 2012 from $100 to $120 per barrel to $105 to $135 per barrel.

JP Morgan's analysts predict WTI average price at $111 per barrel in 2012 and $122 per barrel in 2013.

Following the auction on February 21, the price on Brent futures for March increased by $1.61 a barrel up to $115.81 per barrel. The cost of WTI futures for March on the New York Mercantile Exchange increased by $2.6 to $121.66 per barrel.

JP Morgan forecasts for oil prices, 2012, 2013 (in $/bl)