JP Morgan said that oil prices will reach $ 120 a barrel before the end of 2012

Oil advances to $ 120 a barrel before the end of 2012 as consumption grows in emerging economies, according to JPMorgan Chase & Co.

The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supplies is unlikely to increase production in the first half of next year unless prices increase by $ 100 a barrel, said the bank said in a report released today. Futures traded at around $ 87 a barrel in New York today, near its highest price in two years.

"Strong growth in oil demand emerging in the next 24 months is likely to pick up the call on OPEC production levels last seen at the top of the rise in oil prices in 2008," analysts led by Lawrence Eagles in New York, said. "We expect oil stocks to continue their trend of drawing in the first quarter."

JP Morgan raised price forecasts for 2011 oil contracts in New York and London. West Texas Intermediate on the New York Mercantile Exchange averaged $ 93 a barrel next year, 3.6 percent from an earlier estimate of $ 89.75, he said. Brent crude traded in London will average $ 95 a barrel next year, up from a previous assessment of $ 91.75.

The bank said the benchmark North Sea, used the price of two-thirds of the world's oil, will average $ 105 in 2012. Future are expected to reach $ 100 a barrel in the first half of 2011.

Brent crude for next month is trading at a premium of 4 cents for the future of February, the price situation known as backwardation suggests that supplies are more immediately in demand for later delivery. This is a "structure that is likely to remain in place for much of 2011 and 2012," said JP Morgan.Oil advances to $ 120 a barrel before the end of 2012 as consumption grows in emerging economies, according to JPMorgan Chase & Co.

The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supplies is unlikely to increase production in the first half of next year unless prices increase by $ 100 a barrel, said the bank said in a report released today. Futures traded at around $ 87 a barrel in New York today, near its highest price in two years.

"Strong growth in oil demand emerging in the next 24 months is likely to pick up the call on OPEC production levels last seen at the top of the rise in oil prices in 2008," analysts led by Lawrence Eagles in New York, said. "We expect oil stocks to continue their trend of drawing in the first quarter."

JP Morgan raised price forecasts for 2011 oil contracts in New York and London. West Texas Intermediate on the New York Mercantile Exchange averaged $ 93 a barrel next year, 3.6 percent from an earlier estimate of $ 89.75, he said. Brent crude traded in London will average $ 95 a barrel next year, up from a previous assessment of $ 91.75.

The bank said the benchmark North Sea, used the price of two-thirds of the world's oil, will average $ 105 in 2012. Future are expected to reach $ 100 a barrel in the first half of 2011.

Brent crude for next month is trading at a premium of 4 cents for the future of February, the price situation known as backwardation suggests that supplies are more immediately in demand for later delivery. This is a "structure that is likely to remain in place for much of 2011 and 2012," said JP Morgan.