TLDR
- J.P. Morgan lowered its Brent crude oil forecast for the second half of 2026
- Bank now sees Brent averaging $86/barrel in Q3 and $80/barrel in Q4 2026
- Brent expected to exit 2026 at $78/barrel and average just $64 in 2027
- Weaker inventory draws and softer demand are behind the downward revision
- Private operators are leaning on government Strategic Petroleum Reserve releases instead of drawing down their own stocks
J.P. Morgan has cut its Brent crude oil price outlook for the second half of 2026, pointing to weaker-than-expected demand and slower inventory drawdowns.
The bank now forecasts Brent crude averaging $86 per barrel in the third quarter of 2026 and $80 per barrel in the fourth quarter.
By the end of 2026, J.P. Morgan expects prices to sit at $78 per barrel. Looking further ahead, the bank projects Brent will average $64 per barrel across 2027.
Demand and Inventory Miss Expectations
OECD commercial inventory withdrawals have come in below what the bank had originally forecast. At the same time, demand losses have been larger than expected.
Together, these two factors have taken pressure off oil prices. J.P. Morgan said the market has rebalanced in a way that looks different from what it had originally projected.
The combination of weaker demand and slower stock draws means there is less upward support for prices than the bank had counted on.
Oil Flows and Reserve Releases
Oil flows are currently running at around 8.6 million barrels per day. In June so far, flows have averaged 6.3 million barrels per day, which is higher than levels seen in April and May.
Despite the pickup in flows, private operators have largely chosen not to draw down their own oil stocks. Instead, they have relied almost entirely on government Strategic Petroleum Reserve releases to keep refineries running.
J.P. Morgan expects OECD inventories to draw by an additional 50 million barrels between April and July under its revised second-half forecast.
The bank also flagged a potential oversupply building in the fourth quarter of 2026 and into the first half of 2027. If that plays out, producers would likely need to cut output in early 2027 after a period of maximized production in late 2026.
J.P. Morgan has not indicated any specific catalyst that could reverse the trend before year-end.
The revised forecast reflects a more cautious view on global oil demand heading into the back half of the year. The $64 average projected for 2027 marks a steep drop from the $80 and $86 levels forecast for the second half of 2026.
No changes to the bank’s outlook for other energy commodities were included in the research note.
The forecast update was published on June 24, 2026.
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