JP Morgan cuts oil price forecasts on weak demand, higher output

(Reuters) - JP Morgan on Monday lowered its oil price forecasts for 2025 and next year, citing higher production from OPEC+ and weaker demand.

The bank cut its 2025 Brent price forecast to $66 per barrel from $73 and its 2026 target to $58 from $61. It lowered the 2025 WTI price outlook to $62 per barrel from $69 and the 2026 view to $53 from $57.

Brent crude futures were trading around $65 on Monday, and U.S. West Texas Intermediate crude futures were around $61. [O/R]

JP Morgan now expects global oil demand to increase by 0.8 million barrels per day (mbd), with growth averaging only 0.3 mbd in the third quarter.

"Higher production volumes from the OPEC+ alliance indicate a shift in the reaction function, which, when combined with weaker demand, will push balances into a large surplus and drive Brent down below $60 towards year-end," the bank said in a note.

The oil market remains under pressure from an "80% probability of a mild recession coupled with an additional 1 mbd of increased" production by the Organization of Petroleum Exporting Countries (OPEC), JP Morgan analysts said.

While OPEC+ is poised to gain market share in 2025, stabilizing the market at $60 Brent in 2026 would require the alliance not only to reverse current production increases, but to implement further cuts, JP Morgan said.

Earlier this month, Goldman Sachs reduced its Brent and WTI oil forecasts for 2025 and 2026 on the expectation of higher OPEC+ supply and the risk of an escalating trade conflict will trigger a global recession, denting demand.

(Reporting by Brijesh Patel and Ishaan Arora in Bengaluru; Editing by Chris Reese and Leslie Adler)