By Satish KanadyAgainst the backdrop of Opec’s Vienna decision to cut oil production, QNB yesterday revised its oil price to average $60 per barrel (/b) in 2017,, an upgrade of about $5/b from its previous forecast.
The cuts proposed in last week’s agreement would reduce world oil production by around 900k barrels on average in 2017, compared with the average production in 2016. This would wipe out the current supply glut.
Additionally, the IEA expects global oil demand to grow by 1.2m barrels in 2017.
Therefore, the global oil market would shift from excess supply of 600k b/d in 2016 to undersupply of 1.6m b/d.
“As a result, we would expect prices to average $60/b in 2017”, the bank noted in its latest ‘economic commentary’ yesterday.