(30 OCTOBER 2017)DAILY MARKET BRIEF 2:Crude Oil Prices: World Bank renewed its bullish forecast for 2018

(30 OCTOBER 2017)DAILY MARKET BRIEF 2:Crude Oil Prices: World Bank renewed its bullish forecast for 2018

30 October 2017, 12:52
Jiming Huang
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The WTI crude oil price has broken its resistance area around 53$. The commodity is now trading above $54. This increase appears after the World Bank, in its last report, is predicting an increase in price for 2018. The World Bank target is $56 for next year. In this report the institution considers that the increase in demand as well as a decline the production volume will likely add upside pressures on the price.

It is worth noting that the forecast regarding oil prices are lower than the one made in April. Indeed the agreement between OPEC members may not be extended and the end of oversupply is likelier which increase upside risks in crude oil barrel valuation. If the OPEC agreement was abandoned, the impact on oil prices would definitely be significant. The World Bank also underlines risk that shale gas producers may also increase their production at current price levels.

For the time being, OPEC members have committed to their agreement at 120%, certainly in an effort to keep market shares against the US shale gas industry. We nonetheless consider that OPEC margin is getting thinner. Competition on oil prices are fierce and should still be at the advantage of the OPEC for some more time.

By Yann Quelenn

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