12 January 2018, Sweetcrude, Lagos — The World Bank has given a forecast of crude oil price saying it should average $58 per barrel in 2018.
In its newly released 2018 Global Economic Perspective report, WB said the average of $58 per barrel is a slight upward revision from June forecasts, and edge up to $59/bbl in 2019.
These projections reflected expectations of an increase in U.S. production due to continued efficiency gains in the shale oil industry, moderate non-Organisation for Economic Co-operation and Development, (OECD) demand growth, and very limited OECD demand growth.
Downside risks for oil prices arise mainly from the resilience of the U.S. shale industry and from weak compliance to the agreed production cuts.
Conversely, upside risks to prices include the possibility of supply disruptions among politically stressed oil producers (e.g., Iraq, Libya, Nigeria), as well as stronger demand growth, the report said.
Oil prices averaged $53 per barrel (bbl) in 2017, up 24 percent from 2016, but were volatile throughout Nigeria, and Libya which were exempted from production targets.
The price dip temporarily halted the upturn in U.S. shale drilling.
Prices then increased to around $60/bbl toward the end of 2017, amid strengthening demand, falling stocks, and an agreement in late November to extend production cuts until the end of 2018.