JPMorgan Recommends Investors Maintain Bullish Bets on Brent Crude Oil
JPMorgan Chase & Co. recommended investors maintain bets Brent oil prices will rise as global supplies drop and demand from developed countries increases.
Investors should hold on to long Brent positions and buy the spread between March and June contracts, JPMorgan analysts led by Lawrence Eagles, said in a research note dated Jan 13. Drilling delays resulting from regulations in the wake of BP Plc’s Macondo spill will reduce 2011 crude production by 175,000 barrels a day from pre-spill forecasts, while OECD inventories have fallen on recovering demand, the note showed.
“The way things are panning out fits with our broader projections for a global crude-oil market deficit throughout the first quarter,” JPMorgan said. Crude stockpiles in members of the Organization for Economic Co-operation and Development in December “could have had fallen to lows only reached in one period in the past 11 years,” the analysts said.
Brent crude prices are trading at the highest in over two years after the Trans-Alaska Pipeline System, which carries 15 percent of U.S. production, was halted because of a Jan. 8 leak. Brent for February settlement advanced 24 cents, or 0.2 percent, to $98.30 a barrel, the highest since September 2008.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net
To contact the editor responsible for this story: Jane Lee in Kuala Lumpur at jalee@bloomberg.net
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