Benchmark crude oil prices will likely average $54 a barrel in the first quarter, but the rally may stall if producers don't deliver on pledged supply cuts, a CNBC survey of strategists and forecasters showed.
OPEC agreed in November to cut production for the first time since 2008, defying sceptics. The cuts totaling about 1.2 million barrels a day aim to accelerate the global oil market re-balancing process.
Though the supply curbs are effective from January 1st, compliance rates will only become clearer in February. Oil bulls are betting OPEC will stick to the script. Consultancy Energy Aspects expects compliance rates of around 80 percent but getting Iraq to adhere to the quota will be challenging. Oil bears, however, believe speculating on the final outcome is premature.
"The recent rally in oil prices above $50 rests more on faith than fact: no hard data on compliance around pledged supply cuts by OPEC and non-OPEC countries will emerge until February" said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, who expects Brent crude to average $47 in the first quarter.
Brent crude will likely average $53.83 a barrel in the first three months of 2017, according to the poll of 30 strategists, traders and economists. Respondents' price forecasts ranged from as low as $46 to as high as $65 a barrel.