J.P. Morgan cuts second-half 2026 Brent oil price forecast

J.P. Morgan reduced its price outlook for Brent crude oil in the second half of 2026, citing weaker commercial inventory withdrawals and softer oil demand than previously anticipated.

The bank now projects Brent will average $86 per barrel in the third quarter and $80 per barrel in the fourth quarter, with prices expected to reach $78 by the end of 2026.

OECD commercial inventory draws have fallen short of expectations while demand losses have exceeded forecasts, resulting in reduced upward pressure on oil prices, J.P. Morgan said in a research note.

The bank noted that the market has rebalanced through a substantially different combination of demand losses and inventory withdrawals than originally projected.

Oil flows are currently running at approximately 8.6 million barrels per day and have averaged 6.3 million barrels per day in June so far, which is materially higher than April and May levels, according to the bank.

Private operators have largely declined to draw down oil stocks and have relied almost entirely on government Strategic Petroleum Reserve releases to maintain refinery operations, J.P. Morgan said.

The bank expects OECD inventories to draw by an additional 50 million barrels between April and July in its second-half forecast.

Production would likely need to be reduced in early 2027 following a period of maximized output in late 2026, given the scale of the projected oversupply in the fourth quarter of 2026 and first half of 2027, the bank added.