Moody’s and S&P predict average oil price to be around $55 per barrel (b), whereas Goldman Sachs and Credit Suisse are predicting Brent price to be $62 and $60 per barrel in 2018.
The Oil & gas industry in 2018 received stimulus through upward oil and gas price corrections resulting in renewed interest in upstream investment. Downstream companies generated desirable returns to remain in the hunt for growing business. Oil price showed less volatility in 2017, presented rising signs primarily owing to production cuts of around 1.8 million barrels per day (bpd) by both OPEC and some Non-OPEC producers.Moody’s and S&P predict average oil price to be around $55 per barrel (b), whereas Goldman Sachs and Credit Suisse are predicting Brent price to be $62 and $60 per barrel in 2018. EIA forecasts Brent spot prices to average $57/b in 2018, up from an average of $54/b in 2017 and West Texas Intermediate (WTI) crude oil prices are forecast to average $4/b lower than Brent prices in 2018 .
Based on emerging geopolitical factors, OPEC and some Non-OPEC oil producers’ cohesive agreement to production cuts throughout 2018, Hedge funds are backing higher oil prices in 2018. On 3 January 2018, WTI crude (Nymex) and Brent crude (ICE) were trading at $ 60.89/bbl and $67.09/bbl  respectively, registering a rise of 23 percent and 16 percent over the previous year. The World Bank predicts Oil prices to average $56/b in 2018, higher than the average price in 2017. On the contrary, BofA Merrill Lynch 2018 predictions for WTI and Brent prices are $52/b and $56/b respectively , lower than their 2017 predictions. BofA Merrill Lynch predicts U.S. natural gas prices to average $3.30/million BTU in 2018.
EIA projects US oil production to reach 10.0 million b/d in 2018, which could balance out production cut by the OPEC and Non-OPEC allies. Despite higher production from US, emerging global demand-supply scenario suggests that crude oil buyers will have to pay higher price in 2018 compared to 2017. Oil price recovery started towards the end of 2016 continued through 2017 and most likely stay on course in 2018.
Major factors which influenced price of crude in 2017 include unified decision by OPEC to maintain production cut, shutdown of the 400,000 barrel/day Forties line in the North Sea, and declining production in Venezuela.
Riding on rising oil price exploration and production (E&P) activities gathered momentum in the USA, which is evident from the fact that rig count rebounded to 747  by 29 December 2017 from 525 in 30 December 2016, registering a staggering 42 percent growth. As expected the oil & gas companies in US accelerated upstream activities to boost production in 2017. Early signs in 2018 indicate that oil & gas companies will continue to boost invest in E&P activities. OPEC upstream investment plans suggest that in 2017, over $40 billion invested in upstream projects or field developments and a similar invest pattern may continue in 2018.
Upstream merger activities were intense in the USA with upstream transaction value reaching $64 in 2017 in line with 2016. The private equity firms were involved in 15 of the 20 largest deals , participated in nearly $15 billion each in acquisitions and in divestitures during the year. The investors were fairly confident and excited about future return on their investment.
The OPEC Bulletin (Oct. 2017) highlights that the oil & gas industry, especially the upstream faces several challenges including global economic uncertainty; overcoming current market cycle; geopolitical dynamics; building investor confidence, restoring investment; developing cooperation and meaningful dialogue; adopting technology for efficient exploration and production; and environmental and sustainable development. These challenges will continue to remain in 2018 and beyond; therefore a comprehensive mechanism should be developed to integrate all stakeholders’ perspective and address emerging market dynamics.
Rising oil prices started to impact net import and balance of payment of India. Crude import value increased from $64 billion in 2015-16 to $70 billion in 2016-17. During April-November, 2017 crude import value already reached $53 billion, which may exceed $80 billion by the end of 2017-18. It is to be noted that liquefied natural gas (LNG) import value was $6 billion in 2016-17 lower than $6.7 in 2015-16, which might increase in 2017-18 and beyond.
Modi Government has been seriously infusing natural gas to complement the existing fuel mix and spread natural gas network across the country. For a long time the eastern states like Odisha, West Bengal, and Bihar had been waiting for gas infrastructure. The Modi government is committed to increase gas accessibility in the eastern states. The current government fast tracked projects to make natural gas available in Bhubaneswar. Government sets target to reach 10 million households and additional thousands of industrial and commercial customers across the country by 2019. The Petroleum & Natural Gas Regulatory Board will have to give a strong push to expand city gas distribution beyond cities. There is no doubt in my mind that 2018 is going to be the defining year for natural gas in India.
In 2017, the Government implemented many transformative initiatives to improve availability, accessibility, and affordability of clean fuel. Pradhan Mantri Ujjwala Yojana scheme launched in May 2016 was intensified in 2017. During April-November, 2017, 46.2 lakh double bottle connections and 206.9 lakh new connections were released out of which 115.8 lakh  were released under PMUY. Aggressive push for green, affordable, and environment-people friendly fuel in the rural India is going to be the focus area for the government in 2018. By 2019, the Government intends to achieve close to 100% penetration of clean cooking fuel in India.
Global oil & gas industry is on the recovery path which will strengthen in 2018. Oil price is forecasted to be in the zone of $55-65/b, which would reduce stress on E&P sector. Indian downstream companies, consumers and government should be prepared to counter rising oil prices. On the contrary, the upstream companies may rejoice escalating oil price. Recent reforms in the upstream sector may start to deliver positive results in 2018 and beyond.
 https://www.eia.gov/outlooks/steo/ accessed on 3 January 2017
 http://www.nasdaq.com/markets/crude-oil-brent.aspx accessed on 3 January 2018
 http://newsroom.bankofamerica.com/files/press_kit/additional/2018_Commodities.pdfaccessed on 3 January 2018
 https://in.investing.com/economic-calendar/baker-hughes-u.s.-rig-count-1652accessed on 5 January 2018
 https://www.businesswire.com/news/home/20180103005540/en/Upstream-MA-Deal-Falls-Sharply-H2-2017 accessed on 5 January 2018