For the first time in 6 months, Wall Street banks seem to be optimistic about the near future of crude oil, The Wall Street Journal reports.
In late October, Bloomberg interviewed America’s 14 biggest investment banks. According to the results of this survey, the average prices of Brent and WTI oil are expected to be around 54 and 51 dollars per barrel respectively. The forecast exceeds the previous one by 1 dollar per barrel for each of them.
Last week, Brent oil exceeded the $60/b threshold for the first time in more than 2 years. Experts say that the recent price rally indicates success – the OPEC+ agreement signed in 2016 and extended this year seems to be finally brining fruit.
NordFX experts say that it’s now clear why Saudi Arabia, Russia and other OPEC+ participants are willing to extend the deal even further to try and push oil prices even higher.
According to a special committee responsible for monitoring the process of implementing the OPEC+ deal, as of September 2017, all the participants complied with the deal by 120%. However, NordFX experts say that the future of the OPEC+ deal is now questioned because of the oil production in the United States. According to The Wall Street Journal, the recent success in the global market of crude oil was mainly dictated by a production slowdown in the USA because of the hurricanes (737 oil rigs last week against this year’s high of 768).
However, Commerzbank analysts predict an increase in the U.S. shale oil production in the 1st quarter of 2018 up to a record-high 10 million barrels a day. If that’s the case, this is probably going to press down the prices and make them retrace in the following months. It should be noted that last year WSJ experts predicted the average price of $72/b, while today’s forecast is only $58/b.
