“The limited resistance to rebel forces entering Tripoli may herald a swift resolution to the civil war, opening the potential for the resumption of Libyan oil exports by the end of 2011,” JPMorgan said in a note to clients.
The bank said downgrades to economic growth projections for the rest of this year and 2012 suggest that oil demand growth could fall by around 500,000 barrels per day next year.
The investment bank expects a balanced supply-and-demand scenario in 2012, with pricing power concentrated in the hands of OPEC’s Gulf producers. It said the concentration of pricing power in OPEC hands is similar to what happened in the middle of 2009, but producers will be much more likely to cut output if demand weakens.
“Even bringing Libyan production forward by a quarter and lowering demand growth implies that during the second half of 2012 OPEC will still be producing close to the elevated capacity levels seen in recent months,” it added.
The bank expects Brent to trade in a range of $100 to $120 per barrel through to the end of 2012, even as significant risks remain both on the economic and supply fronts.
