From around $53 per barrel at the start of 2017, international oil benchmark, Brent crude, closed the year around $66.87, a rise that is expected to continue into 2018.
The 2018 budget proposal submitted by President Muhammadu Buhari in November put the benchmark oil price at $45 per barrel, compared to $44.5 per barrel for the 2017 budget.
The Wall Street Journal, in a survey of 15 investment banks, estimated that Brent crude would average $58 per barrel this year, up from an average of $54 in 2017.
The banks expected West Texas Intermediate, the US benchmark, to average $54 per barrel in 2018, up from $51 in 2017, the report indicated.
The predictions showed an oil market in recovery mode after a price rout that cost hundreds of thousands of jobs, strained the budgets of producers and led to delay or cancellation for dozens of multi-billion-dollar projects.
The Vice President/Head of Energy Research, Ecobank, Mr. Dolapo Oni, said, “It ($66 oil price) is definitely good for Nigeria. The good thing is that over the last few years, we tend to start the year at a price and then end at a higher price.
“We have had to update our forecast and we are seeing a possibility of higher prices of about $75, which will be fantastic for Nigeria. When you have this kind of price in the market, it also gives some support to oil production from some costly fields.”
The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, described the rise to $66 in 2017 as extraordinary, saying it might come back to the $60-$65 range.
“Having said that, even at $65 per barrel, the Nigerian revenue equation is quite positive, compared to previous years. So, we are in a good place.”
But what we do with the revenue in terms of investment, inclusive growth and stimulating economic activities is the issue,” he stated.
Oil prices are likely to continue climbing in 2018 on the back of production cuts led by the Organisation of Petroleum Exporting Countries and a growing global economy, industry executives and analysts say, according to the report.
But any gains are expected to be kept in check by booming supplies from the United States. That means oil prices probably will most soar to the $100-per-barrel level seen in 2014, but they also will not plunge below $30 per barrel like early 2016.
Traders expect prices to be volatile but in a tight range, much like 2017, when crude traded between $45 and $67 a barrel.
In 2017, the market prices stabilised and more recently began to climb, due largely to major exporters’ production cuts, synchronised global economic growth, rising geopolitical tensions in the Middle East and worsening prospects for the economy of big producer, Venezuela.
Brent crude prices finished on Friday at $66.87 per barrel, up by 18 per cent for the year and 49 per cent above its 52-week low in June, following a series of supply disruptions. The WTI prices, meanwhile, gained 12 per cent to end at $60.42 in 2017.
Now, oil traders are contemplating the end of a global glut of crude in 2018 — a long-awaited rebalancing of supply and demand.
In the most bullish scenario for 2018, in which demand grows at around 1.6 million barrels per day, the oil market “should be balanced within the year,” said Giovanni Serio, head of research at Vitol Group, the world’s largest independent oil trader.