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Oil price heading toward $60: Predictions for 2017

Shale production, stronger dollar and easing of tensions in Libya and Nigeria could limit any major gains in oil prices

Published: Updated:

Oil prices will gradually rise toward $60 per barrel by the end of 2017, a Reuters poll showed on Thursday, with further upside capped by a strong dollar, a likely recovery in U.S. oil output and possible non-compliance by OPEC with agreed cuts.

Brent crude futures will average $56.90 a barrel in 2017, according to 29 analysts and economists polled by Reuters. The current forecast is marginally lower than the $57.01 forecast in the previous survey.

However, average Brent prices are expected to improve with each subsequent quarter, starting with $53.67 in the first, to $56.51 in Q2, $58.69 in Q3 and $59.78 in the fourth quarter. Brent has averaged about $45 per barrel so far this year.

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"Crude prices should trade most of the time above their 2016 average. A stronger upside potential should become evident especially in the second half when the market fundamentals will record a significant improvement (under the assumption of strong compliance to the OPEC deal)," said Intesa SanPaolo analyst Daniela Corsini.

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Earlier this month, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices that overstretched many budgets and spurred unrest in some countries.

While the Organization of Petroleum Exporting Countries (OPEC) has agreed to reduce output by 1.2 million barrels per day from January 1, 2017, producers from outside the 13-country member group agreed to cut production by 558,000 barrels per day.

"We expect the deal to only be partly implemented, many of the non-OPEC countries are likely to renege as are many of the smaller OPEC members, but cuts should still be large enough to help rebalance the market," said Capital Economics analyst Thomas Pugh.