Analysts have raised their oil price forecasts for this year as the OPEC supply-cut deal is starting to tighten oil markets, but warned that rising U.S. output could wipe out any significant oil price rise that would result from the cartel's deal, a Reuters poll of 31 economists and analysts showed on Tuesday.
The experts currently expect Brent crude futures to average US$58.01 a barrel this year, compared to a forecast for an average of US$57.43 in the previous Reuters poll.
The latest poll also raised projections for the U.S. light crude WTI, and now it is seen averaging US$56.08 this year, compared to the previous expectation for US$55.71 per barrel.
This was the second consecutive Reuters poll in which experts have raised forecasts for both Brent and WTI prices.
Earlier this month, the U.S. Energy Information Administration increased its forecast for both Brent and WTI crude oil prices by US$2, and now sees Brent prices averaging US$53 and WTI averaging US$52 per barrel this year.
In general, analysts polled in the latest Reuters survey believe that the Trump Administration would be beneficial to the U.S. oil sector. Commerzbank analyst Carsten Fritsch expects that the U.S. shale output "could surprise to the upside" in 2017. Related: Why Is Everyone So Bullish On Oil?
Signs that the U.S. domestic drilling activity is on the rise have been emerging from almost every weekly rig count report lately. The latest figures showed that the number of active oil and gas rigs in the United States increased last week by 18 for a total of 712 active rigs, or 93 rigs above the rig count a year ago. As was the case the previous week, most of last week's gains were oil rig gains, which were up by 15 to 566 at the end of last week.
According to the experts polled by Reuters, the oil market would balance by the middle of 2017, but OPEC would need to extend the original six-month production cut period in order to keep markets stable.
Apart from the supply side of the OPEC deal and U.S. shale, oil prices may continue to react this year to the relations between the U.S. and key Middle Eastern producers and Russia, as well as a stronger dollar, and the situation in Libya and Nigeria, experts reckon.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More