Additional $10 increase in crude oil prices expected by May

Crude oil futures rose sharply after Israel rejected a ceasefire offer in Gaza, reinforcing concerns of a wider Middle East conflict.

The recent bombing of Rafah by Israeli forces in Gaza has also boosted crude prices. Geopolitical tensions, particularly between the US and Iran, have been a key source of support.

J.P. Morgan predicts a tightening market with prices rising by another $10 by May. OPEC’s implementation of new cuts has been ambiguous, but shipments have fallen by 1.3 million bbl/day from the October peak.

Data suggests an improving global economy, and crude inventories have been steadily drawn down in the US, Europe, Singapore, Japan, and China.

The JPM forecast assumes no risk premium from Middle East turmoil and that OPEC+ leaders will unwind 400K bbl/day of cuts from April.