Brent crude prices to average $65/bbl in 2018: BMI

Brent crude prices will remain firm in 2018 on the back of possible high compliance by OPEC and non-OPEC members to their production cut agreement, as well as a positive outlook for global oil demand, BMI Research said in a recent report.

Driven by these factors, the consultancy revised the average price of the benchmark upwards to $65 a barrel, from the previous forecast of $57 a barrel.

"While our annual average forecast is strongly bullish, we hold a bearish short-term outlook on Brent and expect prices to correct in the coming months, before recovering into their longer-term uptrend," the report added.

Last week, the US Energy Information Administration (EIA) raised its 2018 price forecasts on Brent crude and West Texas Intermediate (WTI) crude to average $59.74 per barrel and $55.33 per barrel respectively.

Meanwhile, the National Bank of Kuwait (NBK) said oil prices continue to trade at three-year highs, with Brent and WTI, topping $68 and $62, respectively, last week, helped by protests in Iran, the closure of the Forties pipeline in the North Sea, and extension of the OPEC production cut until end-2018.

However, the bank said it believes rising US crude production is a "significant spoiler" in the price rally.

US crude output reached 9.78 million barrels per day (bpd) at end-2017 and has already surpassed its all-time record of 9.64 million bpd set in 1970. 

Last week, the International Energy Agency (IEA) revised up its forecast to 870,000 bpd this year, more than double 2017’s estimate of 390,000 bpd, contributing more than 75 percent of total non-OPEC supply growth in 2018.

While “2018 could shape up to be another important year,” NBK noted that OPEC would need to capitalize on the prevailing bullish sentiment through its production-cutting efforts and effectively manage the challenge posed by burgeoning US supply.