Suddenly, $100 per barrel forecast is resurfacing!

Crude oil price gained more momentum on the news that OPEC and non-OPEC oil producers planned to extend their cooperation indefinitely. In addition, weak dollar and a record streak of declines in American spare supplies of crude are helping to propel the oil prices. January 2018 is shaping up to be the best January for oil in 12 years.

The Citigroup is predicting a rise in supply disruptions that may drive oil to near $80 a barrel. According to Citigroup, hot spots facing turmoil this year include Nigeria, Libya, Iran and Iraq. Warring factions continue to threaten attacks on oil facilities in Libya, crude infrastructure in Nigeria remains vulnerable to sabotage, Iraq is at risk amid simmering tension in Kirkuk and the Iran nuclear deal remains fragile. Already, the Niger Delta Avengers have threatened to attack deepwater oil installations with Bonga Platform, Agbami, EA Field, Britania-U Field, Akpo Field; as possible targets.

Turmoil in these OPEC nations along with continuing disruption in Venezuela could result in supply losses of more than 3 million barrels a day, Citigroup analysts including Ed Morse, the bank’s head of commodity research, said in a note titled ‘Wildcards for 2018.’

Prices may trade between $70 and $80 a barrel if this occurs during the first half of the year, Citigroup said.

OPEC and its allies including Russia expect the market to rebalance this year after almost 24 months of supply curbs. The International Energy Agency sees a modest surplus during the first half of 2018 turning into a modest deficit during the second half. The improving fundamental picture has helped drive oil price gains, with Brent hitting as high as $71.05 a barrel, the highest intraday level in more than three years.

London-based consultancy Energy Aspects sees a slump in new production outside the US shale patch in 2019 and this could help to send Brent crude briefly back above $100 a barrel next year. In addition, broad-based economic recovery is setting the world up for demand growth of 1.7 million barrels a day in 2018, and there’s a chance that it could be as high as 2 million barrels, according to Energy Aspects.

The International Energy Agency sees global demand exceeding 100 million barrels a day for the first time in the fourth quarter of this year.

FRANK UZUEGBUNAM