On the last trading day of the year, WTI prices hit the highest level since May 2015, trading over $60 per barrel.

Over the last two years oil prices have slumped. Some suppliers have made efforts to raise them back to profitable levels. Both OPEC and a few non-OPEC groups have agreed to cut production through the end of 2018 to eliminate an oil glut. But what else can we expect on the oil market in the coming 12 months?

Today's oil price hike is partly a reaction to a surprise drop in U.S. oil production and in levels of commercial crude inventories over the previous week. The spike is also driven by a decrease in supply due to production cuts and growing demand from China, which has been struggling with record low crude inventories since November.

According to the Short-Term Energy Outlook released by the U.S. Energy Information Administration (EIA) in December, in 2018 Brent and WTI should trade on average at the level of $57/bbl and $53/bbl respectively. Despite the production cut, the agency is betting that prices are likely to fall from the 2017 peaks amid forecasted higher output from non-OPEC countries, outpacing any rise in demand, and contributing to further buildup of crude commercial inventories.

OPEC seems more optimistic about tightening the market in 2018. As their output is expected to fall, higher demand will be covered by excess oil in storage, further easing the surfeit of oil that has kept prices low. OPEC also pointed to the positive impact of global market momentum on the tightening oil market.

Along with OPEC, Goldman Sachs Group (GS  ) raised prices of Brent and WTI in their latest forecast. Goldman, a major player on the energy market, expressed its bullishness by setting the Brent price at $62 USD/bbl and WTI at $57.5/bbl. Citigroup (C  ) and BNP Paribas (EPA: BNP), on the contrary, seem more concerned about the OPEC and non-OPEC producers' compliance with the cuts. The supply cut may not altogether be effective at rebalancing the market, however, since it has allowed shale to grow their market share considerably. According to Citigroup and other major analysts, there will be higher shale output in 2018, with estimates of the increase ranging from 1.2mn barrels/day, according to Rystad Energy, to 0.5mn barrels per day, as Bank of America Merrill Lynch (BAC  ) expects. For its part, OPEC is banking that shale production will cease to be a threat, peaking by 2025 and declining steeply thereafter.

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Since the production cut agreement will be a major factor in determining oil prices in 2018, each nation's compliance with the cutback is important. In the 12 months from November 2016 to November 2017, the majority of 21 participating nations complied at least 80% with the cut, with the highest compliance levels in Saudi Arabia and Russia. Both countries were the biggest supporters of the deal, trying to keep their market share. Key players to watch in 2018 include Iran, Nigeria, and Libya, all of which are exempt from the deal, and Venezuela, which has been wracked by political instability.

Due to its complex structure, a multiplicity of producers, and the advent of cost-cutting technology, the oil market remains beyond the control of one or even a group of producers.

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