"Considerable Uncertainty" Accompanies World Bank Raising 2017 Crude Price Forecast To $55

In anticipation that the Organization of the Petroleum Exporting Countries (OPEC) output cut agreement will help trim excess global supply, the World Bank has raised its 2017 crude oil price forecast to $55 per barrel from $53 per barrel.

The institution justified the hike on expectations that oil, natural gas, and coal prices will soon jump nearly 25 percent: "We expect a solid rise in energy prices, led by oil, next year," said John Baffes, senior economist for World Bank.

However, Baffes added that, "there is considerable uncertainty around the outlook as we await the details and the implementation of the OPEC agreement, which, if carried through, will undoubtedly impact oil markets."

If the analytical community is anything to go by, the bank has plenty reason to view the market cautiously: many critics think OPEC's bid to limit production to a range of 32.5 million to 33.0 million barrels per day (bpd), compared with record output of 33.6 million bpd in September, will do little if anything to foster a true market rebalance.

Plus, critics such as Gaurav Sodhi, senior analyst at Intelligent Investor, doubt the deal will be ratified: earlier this month he remarked, "I'm surprised [the deal] is being taken so seriously: [OPEC] is a dying organization with limited relevance in a world where shale is now the swing producer and the marginal setter of prices."

More troubling still, World Bank's forecast coincides with Bloomberg reporting on Friday that the price difference between Brent crude for delivery in two months and three months – which tells traders how well supplied the market is - widened to minus 69 cents on Thursday, the biggest discount since February.

This weakness flies in the face of statements coming from Saudi Arabia last week that the oil market is rebalancing: "In the very short-term, the market remains oversupplied not only by a small margin, but by a large one," said Carsten Fritsch, commodity analyst at Commerzbank AG.

Bloomberg also reported on a "flood of crude" into Europe and the Mediterranean thanks to Nigeria, Libya, and Russia increasing output.

The Saudis have declared the global glut to be over several times this year, despite strong evidence to the contrary; however, some experts such as Barry Dawes, executive chairman of Martin Place Securities, agrees that the oil market is fundamentally recovering, and earlier this week he told CNBC that as a result, "I expect we'll see about $60 by the end of the year, taking into account seasonal impacts tying in with I guess a different attitude from OPEC."