The price of Brent traded at $67 per barrel on Tuesday, the highest level in two-years
Moody's forecasts oil range of $40-$60 for 2018
Moody's Investors Service forecasts oil prices to remain in the $40 to $60 per barrel range this year despite ongoing production curbs by Opec and other major non-Opec producers.
Prices are likely to remain "range-bound", noted the ratings agency, as supply will continue to grow from increased shale production and an abundance of natural gas from the US that will offset any gains accrued from production cuts.
"Political unrest in the Middle East, alongside assumptions of Opec extending its agreement to cut production, helped to bolster oil prices in late 2017," Terry Marshall, a Moody's senior vice president said in a statement. However, “reduced but still significant global supplies, and potential non-compliance with agreed production cuts" will continue to put pressure on prices in 2018, he added.
The price of Brent trended at $67 per barrel on Tuesday - the highest level in two years - as protests in Iran fuelled a rally. Oil prices have seen a significant recovery last year due to sustained production cuts of around 1.8 million barrels per day (bpd) by both Opec and non-Opec producers to draw down inventories. The fallout over the Kurdish independence referendum as well as supply disruptions to a North Sea pipeline led to price surges towards the latter half of 2017.
Despite a reduction in global oil inventory from above five-year average of 340 million barrels at the start of 2017 to half that level by the end of the year, significant supplies of US shale have been hedged to flow back into the market in 2018.
Moody's prediction for the oil market, follows credit ratings agency S&P's forecast in November that oil prices would average $55 per barrel this year on the back of sustained production cuts.
Investment banks Goldman Sachs and Credit Suisse are forecasting the price of Brent to rise up to $62 and $60 per barrel in 2018.
Denmark's Saxo Bank has a contrarian view and said in November that oil prices could fall to as low as $35 per barrel this year, as China and India, the biggest importers of crude accelerate adoption of electric vehicles in a bid to curb pollution in their cities.