How much will oil cost in 2018?

The average weighted price of the OPEC conditional basket increased by 8% in September and amounted to 53.44 US dollars per barrel, which is the maximum value since July 2015, reports with reference to the AFC.

Oil prices found the main support in improving the fundamentals, especially in connection with the market's rebalancing, which was facilitated by the fulfillment of the OPEC agreement to reduce production. The growth of oil quotations caused a surge in speculative purchases in the market. Hedge funds have become very optimistic about the prospects of the entire oil complex. Thus, for a month the net long position on futures and options related to ICE Brent and NYMEX WTI increased by 196.6 thousand contracts (~ 197 million barrels).

The OPEC member countries totally produced 32.75 million barrels of oil per day (b/d) in September, which is 88.0 thousand b/d more than a month ago. Oil production increased in Libya, Nigeria, Iraq and Gabon, while there was a decline in Venezuela.

According to the OPEC analysts, oil prices will remain at $ 50-55 per barrel next year. Higher prices above this level would prompt US oil producers to expand their drilling activities, whereas in the case of lower prices, a reduction in investment is likely.

In September the world oil production increased by 0.41 million b/d in comparison with the previous month of 96.5 million b/d. In particular, the production by non-OPEC member countries increased by 0.31 million b/d to 57.65 million b/d.

It is expected that world oil demand will increase by 1.5 million b/d in 2017, with an increase of 30,000 b/d, which is associated with an improving economic activity. The increase in demand from the OECD countries and China is positive. In 2018, world oil demand will grow by 1.4 million b/d after an adjustment with an increase of 30,000 b/d compared to the previous report, which is due to the improvement of economic prospects in the world economy, especially China and Russia.

In August, oil production in Kazakhstan decreased by 78 thousand b/d in comparison with July, reaching 1.4 million b/d. The level of production of natural gas liquids remained at the level of 0.27 million b/d. Thus, the total production volume amounted 1.67 million b/d, which is 0.07 million b/d lower than the level of the previous month. The decline in production at the largest field of the country, Tengiz was offset by an increase in production at Kashagan (reaching 200,000 b/d) and Karachaganak Fields. According to the OPEC forecast, the level of oil production in Kazakhstan in 2017 will increase by 0.18 million b/d, which is due to the growth in production at Kashagan Field. In 2018, production will grow by 0.06 million b / s. However, accurate forecasting of the production level in 2018 has its difficulties, since peak performance at the Kashagan Field may occur earlier than expected, in 2019.