A worker prepares to lift drills by pulley in the Permian basin outside of Midland, Texas. Brittany Sowacke | Bloomberg | Getty Images

Citi believes international oil prices will average $60 a barrel in 2019, remaining near current levels as OPEC-led production cuts encourage U.S. drillers to put more crude on the market. OPEC, Russia and other producers agreed on Friday to remove 1.2 million barrels per day from the market beginning in January. The move follows a more than 30 percent collapse in oil prices that saw international benchmark Brent crude fall from more than $86 a barrel to a 13-month low of $57.50 last month. Some analysts forecast the production cuts will cause Brent to rebound back toward $70 or $80 a barrel. However, Citi says an earlier round of production cuts from the so-called OPEC+ alliance has only delayed the inevitable. Rather than putting oil on a steady upward trajectory, the new supply cuts "almost certainly" set up another sell-off.

"OPEC+ did the work of drawing down inventories that otherwise would have to be done through a painful period for shale producers," Citi said in a research note written by a team led by Ed Morse, the firm's global head of commodities. According to the bank, "the more OPEC+ tries to support prices by withholding oil from the market, the more they give the US shale sector an out from rationing supply growth themselves." Citi says U.S. crude prices would need to hold steady around $45 a barrel in order keep American production flat. U.S. output has recently risen to an estimated 11.7 million barrels per day, making the United States the world's biggest crude oil producer. In its primary forecast, Citi sees Brent crude trading at $55 to $65 a barrel in 2019, as global oil stockpiles continue to rise through the middle of the year. If the OPEC+ production cuts fall apart, Brent could fall back into the $40s, Citi says. On the other hand, if OPEC and its partners decide to take more oil off the market, or if supply disruptions develop, Brent could rise back to $70 or $80.