Oil could hit $100 a barrel soon, JP Morgan predicts

China's economy was quick to recover from the global downturn and has been growing at a spectactular pace, resulting in rampant demand for oil

Julia Kollewe
Guardian

Chinese demand could push crude to $100 a barrel soon, according to JP Morgan, with the weaker dollar and restocking of French oil inventories once strikes end also helping to drive up oil prices.

China's economy was quick to recover from the global downturn and has beengrowing at a spectactular pace, resulting in rampant demand for oil. Growth has slowed slightly to an annual rate of 9.6% in the third quarter from 10.3% in the second.

JP Morgan raised its forecast for US crude futures to an average of $81 a barrel in the fourth quarter, from $75 a barrel.

"The key risk is that we are being too cautious and that the threat of $100 per barrel oil that is implicit in our fourth quarter 2011 oil forecast arrives much sooner than we expect – driven by not only a weak dollar, but also by rampant Chinese and emerging market demand and the rebuilding of French strategic stocks," said Lawrence Eagles of JP Morgan.

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