Oil Price determining factors in 2018

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In 2017, Brent crude oil prices rose 20.5%, reaching $ 66.87 per barrel (bp) on December 29, 2017 compared to 55.47bp on January 3, 2017. Brent hit $70bp on January 15th. This is 30.3% above the average of $53.71bp in 2017, and 55.5% above the reference price of the 2017 Nigeria budget of $45bp.
Among others, in the oil and gas sector, these are the questions everyone is asking “Is this price sustainable throughout 2018?”, “Will oil prices continue to rise?”. For a country as dependent on oil revenues as Nigeria, the answers are of the utmost importance.
 Like any other commodity, the price of oil is determined by current and projected levels of supply and demand. Thus, we need to examine the factors that influence the supply and demand of the oil and gas market, to understand the factors that will influence future oil prices.
Demand - supply factors and economic conditions of the world in the oil and gas sector
From demand point of view, the economic conditions of large countries can influence the oil and gas market and affect the quantity demanded. China, for instance, is the second largest economy in the world and the largest consumer of oil. The rapid industrialization of the past decade has resulted in increased demand of the oil and gas for the country.
Though, the more recent shift to services and the downsizing of the manufacturing sector have capped and even reduced the country's oil and gas consumption. Also, the 2016 Chinese slowdown triggered market fears, which caused a huge sell-off of global investors. These conditions contributed to the sharp drop in oil prices to less than $ 30bp in 2016.
 Macroeconomic conditions in most parts of the world are expected to improve in 2018, pushing up global gross domestic product (GDP). India is expected to grow by 7.4% (compared to 6.7% in 2017), driven by stronger domestic demand, while continued budget support in China will lead to growth of 6.5%.

Sub-Saharan Africa's GDP growth rate is expected to rise from 2.6 percent in 2017 to 3.5 percent in 2018, thanks to the rebound in commodity prices. Overall, global growth is expected to increase from 3.5% in 2017 to 3.6%. Oil prices are favoured by economic growth and the resulting increase in demand.

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