Citigroup Anticipates $70 Oil

Crude oil prices could shoot up to $70 a barrel by the end of 2017, as supply and demand levels continue to rebalance in coming months, according to analysts at Citigroup.

Nearer-term, the research team has raised price estimates modestly by $5 to an average $55 per barrel for the first quarter and by $2 to an average $56 per barrel for the second quarter, CNBC reported.

Yet investors will likely have to wait a few more months for a more sustained rise, says Citi in the note published on Tuesday, as Brent traded up marginally to around $56 in early European trade.

"Oil prices are not likely to stray far from their current $53-58 per barrel range in the near term, as record investor net length and bearish inventory data will likely cap prices until more tangible evidence of a tighter market emerges," write the analysts.

Citi's research team is looking to the second quarter for positive effects from both the reported 93% compliance level of OPEC participants in last November's production cut agreement as well as substantial refinery maintenance in Asia scheduled for the spring.

"However, a close eye must be kept on delivery timetables," David Ernsberger, Global Head of Energy at S&P Global Platts, told CNBC's Squawk Box on Tuesday.

"There is the shadow looming of new supply coming to market not just from Iran but also from the US and what we're looking at heading into the second quarter is when will that oil come to market and will it begin to take the edge off prices a little bit."

Looking beyond 2017, Citi's optimism also fades on expectations that increasing numbers of shale producers will be enticed back into the market by more favorable pricing.