Oil prices will head back toward $100 per barrel as a supply crunch returns to the energy market, JPMorgan says

Oil prices have been on a steady slide all summer long, but that could change in the last few weeks of the year as supply tightens, according to JP Morgan.

In a note published on Wednesday, analysts backed their forecast for the international oil benchmark to hit $101 a barrel in the fourth quarter and $98 a barrel in the next five years.

"Despite fears over the strength of the global economy, our balances continue to suggest that surpluses observed over summer will turn into deficits starting from October," said JP Morgan.

The price of oil peaked at $122 a barrel in June. On Friday, the price of oil fell.

There are four reasons why a retest of the $100 level is possible.

• Global demand for oil is expected to rebound by about 1.5 million a barrels in the fourth quarter, especially as the natural gas crunch encourages more switching toward oil. 
• Releases from the US Strategic Petroleum Reserve are set to this fall, with final deliveries potentially reduced or even canceled.
• A revival of the Iran nuclear deal, which could add another 1 million barrels a day to supply, is unlikely. On Thursday, a State Department official said efforts to reinstate the agreement have "hit a wall."
• Sanctions will limit supplies, and the European Union's ban on seaborne Russian oil imports will kick in by December 5. The partial embargo could leave Russia with an extra 4.1 million barrels a day to hand off to other customers. But Russia only has the tanker capacity to reship 3.2 million barrels a day in theory, the bank said, creating a shortage of 900,000. Still, China and India are capable of absorbing most of that volume.

The stabilizing of the US dollar is not in the baseline forecast of JP Morgan.

Gains in the dollar's value can hurt demand because it makes the commodity more expensive to purchase in foreign currency. The US Dollar Index hit a new 20-year high on Friday, causing oil prices to plunge.

Craig Erlam, senior market analyst at Oanda, said in a note that the threat of a global recession continues to weigh on oil prices. A recession is the price to pay for getting a grip on inflation, which could weigh on demand next year, according to central banks.