The extension of the OPEC and allies’ production cut deal through the end of 2018 is sending a stronger signal that the oil market rebalancing could speed up and send WTI oil prices to average $54.78 a barrel in 2018, up from a previous projection of $52.50, a Reuters poll of 30 analysts and economists showed on Wednesday.
The experts surveyed now expect Brent Crude to average $58.84 a barrel next year, compared to a forecast of $55.71 per barrel for 2018 in the previous Reuters poll conducted at the end of October.
At 07:02 am EST on Wednesday WTI Crude was down 1.18 percent at $56.94, and Brent Crude was trading down 1.03 percent at $62.21, after the American Petroleum Institute (API) reported on Tuesday a large draw of 5.481 million barrels of United States crude oil inventories for the week ending December 1, but a massive build of 9.196 million barrels in gasoline inventories, compared to forecasts of a much smaller 1.145-million-barrel build. The EIA inventory report is due out at 10:30 a.m. EST today.
OPEC and friends’ deal on rolling over the cuts to the whole of 2018 is a positive sign expected to support oil prices next year, the analysts in the Reuters poll say, adding that tensions in Saudi Arabia, Venezuela’s precarious economy, and possible production outages in Libya and Nigeria could also be a bullish factor for oil prices next year.
While some of the experts surveyed by Reuters expect OPEC to keep compliance high because the individual producers need higher oil prices to cut budget deficits, others express lingering doubts about the resolve of the group of non-OPEC nations to stick to pledges, especially the leader of that group, Russia.
China and India will lead the non-OECD oil demand growth in 2018, the experts say, with Asia the key driver of demand growth.
Apart from the production cuts, OPEC and its partners are hoping that robust demand growth would help them to cut down global inventories to their five-year average.
By Tsvetana Paraskova for Oilprice.com