JP Morgan raises oil price outlook, but trims demand-growth forecast

The US bank said prices for Brent crude, the international benchmark for oil markets, would average $70 per barrel in both 2018 and 2019, up from an earlier forecast of $65 and $60 per barrel respectively. (Reuters)
Updated 13 July 2018
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JP Morgan raises oil price outlook, but trims demand-growth forecast

BENGALURU: Investment bank JP Morgan on Friday raised its outlook for oil prices, but lowered its forecast for global crude demand-growth this year amid increasing uncertainty over international trade.
The US bank said prices for Brent crude, the international benchmark for oil markets, would average $70 per barrel in both 2018 and 2019, up from an earlier forecast of $65 and $60 per barrel respectively. Brent stood at around $74 on Friday.
“Uncertainty around actual OPEC production increases, current budget constraints and sanction effects could mean near-term oil prices remain elevated,” the bank’s European equity research team said in a note.
The Organization of the Petroleum Exporting Countries in June agreed on modest increases in oil production starting in July but it is not yet clear how those will pan out, while the United States is set to reimpose sanctions on major crude supplier Iran in November.
However, the bank said oil prices would be capped by “rising OPEC spare capacity and short-cycle US shale well economics against a muted demand growth-backdrop in 2018/19.”
It revised its 2018 demand-growth outlook to 1.2 million barrels per day (bpd) from 1.4 million previously, though its 2019 forecast edged up a touch to 1.1 million bpd from 1 million.
“The global macro outlook, weakness in emerging market currencies, impact of the last rally in oil prices, impact of sanctions on Iran and rising trade uncertainties are all potential risks to oil demand-growth,” the bank said.
Washington and Beijing have been descending deeper into a tit-for-tat trade war, with steep tariffs slapped on a raft of goods by both sides.
JP Morgan said it expected global oil supply to remain robust despite short-term disruptions, forecasting OPEC supply in 2018 at about 32.9 million bpd.
It said non-OPEC supply was expected to increase by 2.2 million bpd year-on-year in 2018 and by 1.7 million bpd in 2019, “driven significantly by the US as well as Canada, Russia, Kazakhstan and Brazil.”
The bank added that volatility seen in oil markets this year would likely to continue.
“We expect continued price fluctuations within a wide $50-80/barrel range, with the strip gravitating lower over the medium-term and a wider Brent/WTI crude differential.”


Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

Updated 49 min 20 sec ago
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Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

  • Firms under pressure to explain how greener laws will hit business models

PARIS: The five largest publicly listed oil and gas majors have spent $1 billion since the 2015 Paris climate deal on public relations or lobbying that is “overwhelmingly in conflict” with the landmark accord’s goals, a watchdog said Friday.
Despite outwardly committing to support the Paris agreement and its aim to limit global temperature rises, ExxonMobil, Shell, Chevron, BP and Total spend a total of $200 million a year on efforts “to operate and expand fossil fuel operations,” according to InfluenceMap, a pro-transparency monitor.
Two of the companies — Shell and Chevron — said they rejected the watchdog’s findings.
“The fossil fuel sector has ramped up a quite strategic program of influencing the climate agenda,” InfluenceMap Executive Director Dylan Tanner told AFP.
“It’s a continuum of activity from their lobby trade groups attacking the details of regulations, controlling them all the way up, to controlling the way the media thinks about the oil majors and climate.”
The report comes as oil and gas giants are under increasing pressure from shareholders to come clean over how greener lawmaking will impact their business models.
As planet-warming greenhouse gas emissions hit their highest levels in human history in 2018, the five companies wracked up total profits of $55 billion.
At the same time, the International Panel on Climate Change — composed of the world’s leading climate scientists — issued a call for a radical drawdown in fossil fuel use in order to hit the 1.5C (2.7 Fahrenheit) cap laid out in the Paris accord.
InfluenceMap looked at accounts, lobbying registers and communications releases since 2015, and alleged a large gap between the climate commitments companies make and the action they take.

 

It said all five engaged in lobbying and “narrative capture” through direct contact with lawmakers and officials, spending millions on climate branding, and by employing trade associations to represent the sector’s interests in policy discussions.
“The research reveals a trend of carefully devised campaigns of positive messaging combined with negative policy lobbying on climate change,” it said.
It added that of the more than $110 billion the five had earmarked for capital investment in 2019, just $3.6bn was given over to low-carbon schemes.
The report came one day after the European Parliament was urged to strip ExxonMobil lobbyists of their access, after the US giant failed to attend a hearing where expert witnesses said the oil giant has knowingly misled the public over climate change.
“How can we accept that companies spending hundreds of millions on lobbying against the EU’s goal of reaching the Paris agreement are still granted privileged access to decision makers?” said Pascoe Sabido, Corporate Europe Observatory’s climate policy researcher, who was not involved in the InfluenceMap report.
The report said Exxon alone spent $56 million a year on “climate branding” and $41 million annually on lobbying efforts.
In 2017 the company’s shareholders voted to push it to disclose what tougher emissions policies in the wake of Paris would mean for its portfolio.
With the exception of France’s Total, each oil major had largely focused climate lobbying expenditure in the US, the report said.
Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.
AFP contacted all five oil and gas companies mentioned in the report for comment.
“We disagree with the assertion that Chevron has engaged in ‘climate-related branding and lobbying’ that is ‘overwhelmingly in conflict’ with the Paris Agreement,” said a Chevron spokesman.
“We are taking action to address potential climate change risks to our business and investing in technology and low carbon business opportunities that could reduce greenhouse gas emissions.”
A spokeswoman for Shell — which the report said spends $49 million annually on climate lobbying — said it “firmly rejected” the findings.
“We are very clear about our support for the Paris Agreement, and the steps that we are taking to help meet society’s needs for more and cleaner energy,” they told AFP.
BP, ExxonMobil and Total did not provide comment to AFP.

FACTOID

$ 28m

Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.