Oil will breach through $100 a barrel in the first half of 2011 and $120 before the end of 2012, JP Morgan said on Friday, predicting OPEC will be very slow to react to a price spike.

Analysts at JP Morgan said: "The current policy related surge in Chinese oil demand is likely to fade early in the first quarter, but ongoing strength in Emerging Market oil demand over the next 24 months is seen lifting the call on OPEC production to levels last seen at the peak of the oil price spike in 2008."

"We think OPEC is unlikely to raise output ahead of its June 2011 meeting unless oil prices push above $100/bbl, leaving inventories to draw over the first quarter, pushing Brent crude oil into backwardation, a structure that is likely to remain in place for much of 2011 and 2012".

"As such, we continue to stress that the recent pull back in oil prices offers an opportunity for consumers to reinstate their hedges, with the flat structure in the back of the Brent curve providing an attractive entry point. Similarly, investors should look to move their positions to nearby months".(Reuters)