Crude oil prices could rise to $100 per barrel within the year, according to a prediction by JP Morgan. West Texas Intermediate (WTI), a grade of crude oil used as a benchmark in oil pricing, could see prices climb significantly due to reduced incentives for producers to increase output, as noted by Forexlive. The investment bank estimates the equilibrium price for WTI oil, the U.S. benchmark, is currently around $70 per barrel.
JP Morgan suggests that a price of $60 per barrel for WTI Crude is insufficient to encourage production, potentially leading to a surge to $100 per barrel. Early on Thursday, WTI Crude prices rose by 0.7% to $83.45 per barrel. This increase was driven by a larger-than-expected U.S. crude inventory draw and rising chances that the Federal Reserve might announce its first interest rate cut in September.
Oil prices had been low at the beginning of the week due to concerns about China’s oil demand. However, they rose on Wednesday morning after the Energy Information Administration (EIA) released its weekly inventory report. The report showed an inventory draw of 4.9 million barrels of commercial crude stocks for the week ending July 12, aligning with estimates from the American Petroleum Institute, which reported a 4.44-million-barrel draw for the same week.
Currently, U.S. crude oil inventories are approximately 5% below the five-year average for this time of year. Banks and analysts expect oil prices to remain in the $80s range during the third quarter, which is the peak demand season in the northern hemisphere.
Even at the current global price, consumers in Ghana are paying more for fuel due to the depreciation of the cedi. If JP Morgan’s prediction comes to pass, fuel prices are likely to surge even higher, impacting the cost of goods and services, leading to higher inflation and worsening the cost of living.
