Citi Eyes $70 Oil in 2017, but Saudi Says It Doesn't Believe in Rapid Crude Price Changes

Tuesday February 21, 2017

Analysts as Citi Tuesday predicted crude oil prices could hit $70/bbl by the end of the year on the back of high compliance levels from participants in the Organization of the Petroleum Exporting Countries' (OPEC) oil cutback agreement.

Still, with the looming spectre of increased supply from both the US and Iran, any near-term jump in price would seem unlikely.

"Oil prices are not likely to stray far from their current $53-58 per barrel range in the near term as record investor net length and bearish inventory data will likely cap prices until more tangible evidence of a tighter market emerges," Citi wrote, having raised the 1Q 2017 forecast by $5 to an average $55/bbl, and by $2 to $56/bbl for 2Q 2017.

Meanwhile, Oil Search managing director Peter BottenĀ was the latest in a growing number of voices who believe there will be little change in the price of oil this year; he told Bloomberg Monday that, "If discipline remains in OPEC, then I actually believe oil prices with stay pretty much where they're at.

"The supply demand balance undoubtedly is tightening, the inventories are dropping, and on that basis I don't see much happening to the oil price in 2017. But I think if disciplines continue, a slow rise in 2018 and 2019 may be possible.

This "steady for longer" view also echoes comments made earlier in the week by Saudi Arabia's foreign minister Adel al-Jubeir, who told CNBC this week that any "rapid changes" in the oil price would be detrimental to his country, and the international economy.

"The Kingdom has a very long term policy when it comes to stabilizing the oil markets. We believe there has to be balance between supply and demand, and we don't believe in rapid escalation of prices or rapid deterioration of prices," he said.

"Such swings in the price of oil creates economic dislocations that hurts the international economic system, of which we are a part."