At Any Rate

The price of oil has remained relatively subdued since the October 7 Hamas attacks on Israel. This is consistent with our baseline view that oil price will exit the year at $86 before declining to an average of $83 next year amid slowing global economic growth. The main risk to our view is that a broadening of the conflict could close the Strait of Hormuz or that a more general Middle Eastern conflagration could ignite retaliatory responses from major oil producing countries. Crucially, for all of recorded history, despite many threats, the strait has never been actually closed off and oil continued to flow. Iran could retaliate in other ways, such as disrupting shipping in the Persian Gulf. But even the “Tanker War” of the 1980s—when 259 oil tankers were attacked between 1984 and 1987—did not impair Gulf oil exports or substantially increase world oil prices. Similarly, a 1970s style oil embargo by the Gulf oil producing states appears unlikely because two-thirds of GCC’s oil exports today are purchased by Asian clients and, importantly, the economic transformation currently planned and implemented in the region requires sustained absence of conflict.

Speaker:
Natasha Kaneva, Head of Global Commodities Research 

 

This podcast was recorded on 03 November 2023.

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4547564-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Arindam Sandilya, James Nelligan and Patrick Locke discuss the recent stall in the US dollar’s uotrend, and also the outlook for key central bank meetings next week.

 

Speakers
Arindam Sandilya, Global FX Strategy 
James Nelligan, Global FX Strategy 
Patrick Locke, Global FX Strategy 

 

This podcast was recorded on 27 Oct 2023

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4546539-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Global upstream oil and gas spending is tracking $545 billion this year, up from $497 billion in 2022, based on data from 140 public companies and our estimate of private operators’ spending. The latest investment guidance is up 82% from 2020 lows, although still 22% below the 2014 peak. Similarly, producers are on track to complete 59,000 wells globally this year—a 33% decline from the 88,000 new wells put into production in 2014. Yet, total oil supply has risen by about 4% during 2014-2023. For scale, a 103% surge in capex between 2006 and 2014 resulted in a 7% global crude and condensate production growth. A key reason behind the stable production profile despite both investment and well activity levels dropping significantly since 2014 is the declining unit costs due to efficiency and productivity gains. While we find today’s ~$500 billion investment in upstream O&G supply healthy, we estimate that capital spend needs to stay at the current level in order to satisfy demand in 2030.

 

Speaker:

Natasha Kaneva, Head of Global Commodities Research

 

This podcast was recorded on 27 Oct 2023

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4519242-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

 

Jonny Goulden and Saad Siddiqui discuss the latest market developments and their impacts for the EM fixed income asset class.

Speakers:
Jonny Goulden, Emerging Markets Strategist

Saad Siddiqui, Emerging Markets Strategist

This podcast was recorded on 26 October 2023.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4543740-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Meera Chandan, Saad Siddiqui and James Nelligan discuss (a) macro tensions for FX stemming from improving momentum in China / Europe and a less aggressive Fed on the one hand, and rising US yields and escalating geopolitics on the other, and (b) why a flip in bond-equity correlations should result in greater safe-haven demand in currencies benefitting USD and CHF.

 

Speakers
Meera Chandan,  Global FX Strategy

Saad Siddiqui, Emerging Markets Research

James Nelligan, Global FX Strategy

 

This podcast was recorded on 20 October 2023

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4538860-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

 

 

At $93/bbl today, Brent oil price is about $7 overvalued vs its estimated fair value—an appropriate premium given the uncertainty. But beyond the short-term spike induced by geopolitics, our base case for oil remains that large inventory draws observed in 3Q23 will transition to a largely balanced market in 4Q23 (our model oscillates between 100 kbd build and 100 kbd draw) with Brent exiting the year at $86. Strange as it might seem, since 1967, with the exception of the Yom Kippur war of 1973, none of the other 10 major military conflicts involving Israel resulted in a lasting impact on oil prices. In contrast, during conflicts involving a major regional oil producer, oil traded at a wide $7-14/bbl premium to its fair value for an extended period. Currently, oil flows have not yet been affected, with limited risk of future supply losses, in our view. All significant parties in the region have powerful incentives to avoid the widening of the war. And so far they have acted accordingly.

 

Speaker:

Natasha Kaneva, Head of Global Commodities Research

 

This podcast was recorded on October 20, 2023. 

This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4535649-0. For more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Fabio Bassi, Francis Diamond and Aditya Chordia discuss their published views on the ECB and BoE meetings scheduled for next week and their potential market impacts.

 

This podcast was recorded on 20 October 2023
This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4536377-0  for more information; please visit www.jpmm.com/research/disclosures  for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Jonny Goulden and Saad Siddiqui discuss the latest market developments and their impacts for the EM fixed income asset class.

 

Speakers
Jonny Goulden, Emerging Markets Strategist

Saad Siddiqui, Emerging Markets Strategist

 

This podcast was recorded on October 19,2023. This communication is provided for information purposes only. Institutional clients can view the related report at  https://www.jpmm.com/research/content/GPS-4536659-0. For more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPM

In this podcast we discuss the amalgamation of supply risk factors from renewed strike fears in Australian LNG facilities to conflict in Middle East that sent European gas prices above 50 EUR/MWh. Amidst these developments, a move higher in US natural gas prices may be overlooked but since start of the month prompt contract is up 20%. The risk factors that we will discuss not only support the upside move in the prompt contract but also across much of the forward curve.

Speakers:
Shikha Chaturvedi, Head of Global Natural Gas Strategy  

Otar Dgebuadze, Global Energy Strategy

This podcast was recorded on date.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4530064-0, www.jpmm.com/research/content/GPS-4531777-0, www.jpmm.com/research/content/GPS-4529854-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

We discuss our still-constructive view on the dollar and the recent downgrade to our EUR/USD targets to parity (from 1.05).

Speakers:
Meera Chandan,  Global FX Strategy

Arindam Sandilya, Global FX Strategy

This podcast was recorded on 13 October 2023.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4530064-0, www.jpmm.com/research/content/GPS-4531777-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.