Oil and gas analysts at investment banking firm Jefferies have raised their 2018 Brent Crude and WTI oil price forecasts.
The projected price of Brent Crude oil has now jumped from $57 per barrel to $63 per barrel for 2018, and WTI has increased from $54 per barrel to $59 per barrel.
Analysts at Jefferies said they were ‘increasingly confident’ that the oil market would remain undersupplied throughout 2018 and that inventories would fall to 5-year average levels in the third quarter of next year.
Accelerating Chinese demand growth and OPEC’s extension of its production cuts to the end of 2018 were touted as key drivers for the undersupply.
On November 30, OPEC and participating NOPEC countries agreed to extend production cuts to December 2018. A further meeting to evaluate this plan is expected to take place in June next year.
Last month, Ann-Louise Hittle, Wood Mackenzie vice president of oils research, told Rigzone that there would have been a ‘very large’ 2.4 million barrel per day year on year increase in total world oil supply for 2018, if the OPEC agreement had come to its scheduled conclusion in March next year.
Wood Mackenzie expects the OPEC and NOPEC agreement to keep current production restraints in place through 2018 to contribute to an oil price increase in the second half of next year.