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Denmark-based A/S Global Risk Management says it expects to see a bullish market during the second quarter of 2017.

In its latest report, entitled: 'The Oil Market Quarterly Outlook April 17', the company says: "OPEC and non-OPEC's oil production cuts have been implemented and combined compliance is high. Half way through the 6-month period, talks of an extension of the deal are set to take place in May. As some oil producers have cut production, U.S. shale oil producers have turned on the oil taps and ramped up production, limiting the effect of the production cut deal. Global demand is likely to increase around the same level as previous years, by around 1 mio. barrels per day.

"The U.S. central bank, the Fed, hiked interest rates in March, planning another 2-3 hikes this year as U.S. economy is on track for growth. The European Central Bank, ECB, could refrain from taking additional monetary easing measures and Chinese growth in Q4-16 came out improved.

"The geopolitical situation remains fragile. Libyan oil production has been on the rise, but disruptions emerge as pipelines and ports are subject to clashes and sabotage. Recent situation in Syria could escalate the geopolitical risk premium further."

The Global Oil Strength Index (GOSI)

The Global Oil Strength Index, or GOSI, was introduced by Global Risk in 2010. The GOSI is a single number between 0 and 100 that signals Global Risk Management's expectations for the development of oil prices. A reading below 50 indicates a declining trend and above 50 an increasing trend.

Global Risk calculates the GOSI by assigning a strength rating or index for each of three factors (Fundamentals, Financials and Geopoliticals) and then calculating a weighted average based on the three strength ratings.

- Fundamentals - covering the supply and demand balance.

- Financials - covering speculators' interest and the development of the financial market.

- Geopolitics - covering the situation in unstable oil producing regions of the world.

Fundamentals: Apr 2017 - Rating: 50 (same vs Jan 2017). Global Risk says: "OPEC's cut in production has driven up prices and minimised the contango structure. Consequently, US shale production has gotten its second wind. Global oil demand will likely increase by 1 mbpd. in 2017. We set fundamentals as neutral, joker being the decision of OPEC and non-OPEC to extend (or not) the production cut deal into second half of 2017."

Financials: Apr 2017 - Rating: 48 (-4 vs Jan 2017). Global Risk says: "The U.S. central bank continues to hike interest rates and expectations for more hikes this year are high. Question is how many. In the Euro Zone, the Brexit continues to take headlines. A dark horse could be the potential rolling back of Doff-Frank, which undoubdtedly would cause increased volatility in the financial markets. We set the financials as slightly bearish."

Geopolitics: Apr 2017 - Rating: 60 (+9 vs Jan 2017). Global Risk says: "The current oil production cut agreement causes a row of OPEC and non-OPEC countries to curb production and compliance to the deal is high. Libya and Nigeria, exempt from the deal, continue to struggle to keep production stable. At time of writing, situation in Syria seems to potentially escalate. Geopolitics is set to bullish."

GOSI - Rating: 55 (+4 vs Jan 2017) - GOSI is above the 50 level - indicating that the oil price expectation is bullish.

Average price forecasts (by Global Risk Management):

Brent Crude (US$ per barrel)

Q2 2017 - 55
Q3 2017 - 56
Q4 2017 - 58
Q1 2018 - 59

3.5% Rotterdam Barges (US$ per tonne)

Q2 2017 - 294
Q3 2017 - 298
Q4 2017 - 305
Q1 2018 - 311

0.1% CIF NWE Cargoes (US$ per tonne)

Q2 2017 - 483
Q3 2017 - 488
Q4 2017 - 501
Q1 2018 - 508

380 cSt Singapore Cargoes (US$ per tonne)

Q2 2017 - 308
Q3 2017 - 311
Q4 2017 - 322
Q1 2018 - 329

0.05% Singapore Gasoil (US$ per tonne)

Q2 2017 - 477
Q3 2017 - 486
Q4 2017 - 501
Q1 2018 - 510

3% US Gulf Waterborne (US$ per tonne)

Q2 2017 - 292
Q3 2017 - 295
Q4 2017 - 305
Q1 2018 - 311

N2 Heating Oil (US$ per tonne)

Q2 2017 - 466
Q3 2017 - 473
Q4 2017 - 492
Q1 2018 - 499