Reuters reported that JP Morgan raised oil price forecasts for 2011 as a protracted outage in Libya and the run up to summer demand require additional supplies from the Organization of the Petroleum Exporting Countries.

The bank raised its Brent forecast for the second quarter to USD 118 per barrel from USD 105 which combined with smaller increases for the Q3and Q4 results in an increase of USD 6 for the full year 2011 projection to USD 110 per barrel. JP Morgan expects WTI to average USD 99 in 2011 also USD 6 higher than the previous forecast.

JP Morgan analysts headed by Mr Lawrence Eagles said that "There is a real risk that oil producers respond to, rather than preempt, price signals or perhaps wait until Opec's meeting in mid-June before raising output."

The bank said that by then it will be too late to prevent higher prices and could extend what we see as a mid quarter blip to a much more serious and destabilizing price surge that could distort stock holding behavior and economic growth, leading to more significant problems in stabilizing the oil market.

(Sourced from Reuters)