Two factors could drive up oil prices by another $5 to $10 per barrel, JP Morgan said in a statement.
Report informs, citing CNBC, that oil prices may be maintained by the improving outlook for the global economy amid widespread vaccination in the developed countries.
“I think there’s room for oil prices to move a little bit higher in this environment but, you know, not thinking about a price of $80 or $90 a barrel. Maybe it goes up by $5 or $10 more from here,” Kerry Craig, global market strategist at JPMorgan Asset Management, told CNBC’s “Street Signs Asia” on Friday.
In the afternoon of Asia trading hours on Friday, international benchmark Brent crude futures were at $62.91 per barrel. U.S. crude futures changed hands at $59.34 per barrel. Both Brent and West Texas Intermediate crude futures have risen more than 20% each so far in 2021.
Oil prices have moderated in recent days after surging to their highest in more than a year.
Just this week, a deadly winter storm in southern U.S. resulted in days of power outages in Texas, wrecking havoc on the state’s energy infrastructure and taking millions of barrels per day of oil production offline. Energy prices popped as a result of that development.
There are two things that will likely drive oil prices going forward, according to Craig.
Firstly, demand for oil is expected to pick up as the global economy recovers from the hit of the coronavirus pandemic, he said. However, that will be “curtailed to a certain extent” due to the low likelihood of international travel coming back in a big way soon. Travel is an “important source of demand,” he added.
On the supply side, he said: “We’re still relying on those OPEC+ members to keep that supply relatively curtailed and I think there’s still a question about that in terms of the amount of supply coming on relative to demand.”