JPMorgan Revises Oil and Gas Companies’ Outlook Upwards
JPMorgan is sounding more optimistic about the outlook for oil and oil companies in the near future. The leading investment bank has upgraded its outlook for major Europe-based oil and gas companies, expecting shareholder returns to rise sharply.
Oil demand has been weakening so far this year amid rising global trade tensions and a slowdown in the global economy. In addition, several investors have forecast slower growth for conventional energy companies in the face of a drive towards clean energy. JPMorgan, on the other hand, sounds upbeat about better performance of oil companies as they have started adapting to weakening demand by cutting costs and reducing emissions of greenhouse gases.
The report released on Monday when crude oil prices had soared over 20% on the back of recent drone attacks on Saudi oil facilities. Notwithstanding these latest developments, JPMorgan expects oil prices to strengthen and shareholder returns in oil and gas companies to grow to 28% of market cap by 2022. In addition, the bank also expects oil demand to increase by 4% by 2040, with demand peaking between 2035 and 2040.
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