Oil prices will remain between $40 and $60 per barrel in 2018 despite the extension of OPEC-led production cuts through the end of the year, according to Moody's Investors Service late on Tuesday.
Moody's said that higher prices within or above that range will see supply growth as countries lessen their compliance with production quotas and with greater U.S. shale production.
'Meanwhile, abundant supplies of U.S. natural gas will constrain prices, even while demand goes up,' the agency said.
'Political unrest in the Middle East, alongside assumptions of OPEC extending its agreement to cut production, helped to bolster oil prices in late 2017,' Moody's Senior Vice President Terry Marshall said.
'Yet even with these factors offering a boost, prices will likely remain range-bound, and possibly volatile, on a combination of increasing U.S. shale production, reduced but still significant global supplies, and potential non-compliance with agreed production cuts -- especially if demand growth is more tepid,' Marshall added.
According to Moody's, global demand for oil will continue to grow through 2040, with light vehicle oil demand growth peaking by 2030, more because of steadily increasing fuel efficiency for light passenger vehicles than the rise of electric vehicles.
'Major integrated oil companies will invest in renewables and alternative-energy technologies in 2018, and some will continue their transition toward natural gas, with its more favorable carbon footprint and good long-term demand prospects,' it noted.
Brent oil traded at around $67 per barrel on Wednesday at 13.23 GMT.
By Murat Temizer
Anadolu Agency
energy@aa.com.tr