Oil prices are heading for a downturn later this year and will sink even lower in 2019 as the fundamentals of supply and demand weaken, J.P. Morgan forecast in a research note on Friday.
"While geopolitical tensions and lingering risks of large supply disruptions remain an upside risk throughout 2H18, we think that prices will be corrected downwards towards end of the year and remain capped in 2019," J.P. Morgan analyst Abhishek Deshpande wrote in the note.
Despite oil prices recently rising to 3½-year highs, the investment bank left its forecast for international benchmark Brent crude unchanged at $69.30 a barrel. On Friday, Brent was trading at just under $77 a barrel, off its recent high of $80.50.
J.P. Morgan now sees U.S. West Texas Intermediate crude averaging $62.20 a barrel, down $3 from its last estimate. WTI was trading at nearly $66 a barrel Friday, after nearly touching $73 a barrel two weeks ago.
The bank knocked down its 2019 Brent forecast by $1, to $63 a barrel. It lowered its outlook for WTI slightly to $58.25 a barrel.