For yet another month, analysts raised their average forecasts for oil prices this year-expecting WTI Crude to average $58.11 a barrel-but warned that Brent Crude is unlikely to rise much higher than $70, as growing U.S. shale production will offset a large part of OPEC's production cuts.
According to the monthly Reuters poll of 34 analysts and economists on Wednesday, WTI is expected to average $58.11 per barrel this year, up from the $55.78 forecast in the December poll.
So far this year, WTI has beat the expectations, averaging $63.63 a barrel.
The experts polled by Reuters also increased their forecast for Brent Crude and now expect it to average $62.37 per barrel this year, up from the $59.88 projection from last month's poll.
So far this year, Brent has averaged $69 a barrel, and is set to close a fifth consecutive monthly gain.
At 07:00 a.m. EST on Wednesday, WTI Crude was down 0.53 percent at $64.16, while Brent Crude traded down 0.50 percent at $68.18. Investors will be expecting EIA's inventory data at 10.30 a.m. EST to give direction on the U.S. benchmark. Yesterday, the American Petroleum Institute (API) reported a moderate build of 3.229 million barrels of United States crude oil inventories for the week ending January 23. Related: Are Oilfield Services A Buy?
While both benchmarks are currently above the expected average for the year, analysts polled by Reuters don't expect the oil price gains to continue beyond the first quarter of the year, due to the expected surge in U.S. shale production that will likely offset a good portion the cuts that OPEC and its non-OPEC allies led by Russia have been implementing for more than a year now.
But factors like robust oil demand growth, lurking geopolitical risk, and the commitment of OPEC's leader Saudi Arabia to curb production, could at least help to keep a floor under oil prices, Cailin Birch, analyst at the Economist Intelligence Unit, told Reuters.
"However, we expect strong production growth from the U.S., as well as some opportunistic selling by both OPEC and non-OPEC members later in the year, to prevent prices from rising much higher than $70 per barrel on average," Birch noted.
While analysts say that it is too early to predict if OPEC and friends will change the terms of their pact before the end of 2018, some believe that it is unlikely that the production cut deal will be extended as-is beyond 2018.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More