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By Chris Shaw

While the global economic outlook worsens and even with Libya expected to make a rapid return to oil production, JP Morgan continues to see pricing pressures for the oil market. These issues have become more apparent with the broker extending its oil market model to 2013.

On the supply side, the ongoing impact of declining output from mature oil fields is eating into supply side increases in both North America and Brazil. According to JP Morgan this means producers will need to produce at close to flat-out levels for at least the next two years.

While OPEC has a buffer to stabilise the market in the event of any significant shock to either supply or demand, there remain price risks to the global oil market in the broker's view. On JP Morgan's estimates supply constraints will be hit by the end of 2013, which is supportive of higher prices longer-term.

For 2013 an average price of US$121 per barrel is expected, while by the end of that year the quarterly price could be around US$130 per barrel. Shorter-term the view is spot market tightness will see prices remain in a US$20 per barrel range between US$100-US$120 per barrel through 2012.