What's Affecting Oil Price

What's Affecting Oil Prices This Week (May 15, 2017)?

Before the beginning of last week Stratas Advisors forecast that the price of Brent crude would move back above $50 and would test $50.80. The forecast was based on the expectation that geopolitics would be supportive with Macron winning the French presidential election. The firm also expected that the weekly report from the Energy Information Agency (EIA) would be more supportive. In actuality, the price movement of Brent crude aligned closely with our forecast.

The price of Brent crude started the week at $49.10 and then moved downward to $48.73 on Tuesday before bouncing above $50 on Wednesday. The price of Brent crude moved upward through the rest of the week to close the week at $50.84.

The weekly report from the EIA was even more favorable than expected. The report indicated that inventories of crude in the US declined by 5.25 million barrels (MMbbl), while inventories of gasoline dropped by 150,000 bbl, and inventories of distillate fuel oil fell by 1.59 MMbbl.

Stratas also forecast that the Brent-WTI differential would trade in the range of $2.30 and $2.80 with respect to the July contract. The Brent-WTI differential started the week at $2.50 and stayed essentially unchanged through Wednesday then widened to close the week at $2.67.

For the upcoming week, Stratas Advisors forecasts the price of Brent crude will move upward and will test $53.60. The firm also expects that the Brent-WTI differential will trade in the range of $2.30 and $2.80 with respect to the July contract.

What's Affecting Oil Prices This Week (May 8, 2017)?

Before last week, Stratas Advisors forecast that the price of Brent crude would trade between $51and $52. The forecast was based on the expectation that downward pressure would continue because of concerns about supply stemming from rebounding U.S. production.

There are also growing concerns about the strength of demand because gasoline demand in the U.S. continues to lag behind that of the previous year. Stratas expected these concerns would be offset by indications that OPEC-led production cuts would be extended by another six months.

oil prices, forecast

 

Additionally, it expected upward support from the refining sector. While U.S. gasoline demand is lagging, refining inputs to U.S. refineries have been at record levels, which reflect the structural advantage of U.S. refineries. These advantages include scale and complexity, and low-cost feedstocks and energy inputs—coupled with access to markets that require exports.

Stratas Advisors’ forecast of sideways price movement proved to be overly optimistic. The price of Brent crude started the week at $51.73, then started drifting downward through Wednesday, when it reached $50.79. The price of Brent crude then fell significantly on Thursday to $48.38 before rebounding on Friday to close the week at $49.10.

The significant decline on Thursday was initiated by the weekly report from the Energy Information Agency (EIA). While the report indicated that inventories of crude oil in the U.S. fell by 2.4 million barrels (MMbbl), the market focused on inventories of gasoline increasing by 190,000 barrels (Mbbl). It was the third straight week of increases.

Stratas also forecast that the Brent-WTI differential would trade in the range of $2 and $2.50 with respect to the July contract. The Brent-WTI differential started the week at $2.40 then widened to $2.61 on Wednesday. The Brent-WTI differential then narrowed slightly on Wednesday before finishing the week at $2.50.

While the market is exhibiting concerns about the U.S. inventory situation, it is the view of the firm’s Short-Term Outlook team that the concerns are over-hyped. Crude inventories have been declining in the U.S. for several weeks. Furthermore, inventories of gasoline, as well as inventories of distillate fuel oil, remain below the levels of last year during the same time period.

The product inventory situation has occurred even while refinery utilization and crude inputs are running at extremely high levels during the last several weeks—with crude inputs averaging more than 1 MMbbl/d more than for the same time period last year. Additionally, U.S. demand for distillate fuel oil has been very strong this year. While gasoline demand is running below that of last year, gasoline exports are running well above the level of last year.

For the upcoming week, Stratas Advisors is forecasting that the price of Brent crude will move back above $50 and will test $50.80. The firm are also expects that the Brent-WTI differential will trade in the range of $2.30 and $2.80 with respect to the July contract.

What's Affecting Oil Prices This Week? (April 24, 2017)

For the upcoming week, Stratas Advisors is forecasting the price of Brent crude will move upward, testing $52.65. The firm also expects that the Brent-West Texas Intermediate (WTI) differential will trade in the range of $2.30 and $2.80 with respect to the June contract.

The week of April 17 saw a significant downward movement in the oil price, with Brent crude starting off at $55.89, drifting downward in the first part of the week, then falling sharply on April 19 and again on April 21 to close the week at $51.96.

The downturn in prices, which took place after three straight weeks of gains, seems to have been triggered by the rebounding production in the U.S. coupled with concerns that OPEC will not agree to extend the production cuts past June. The steep decline in the second half of the week was prompted by the weekly report from the Energy Information Administration, which showed that gasoline inventories increased the week before, in contrast to the expected drawdown.

Stratas Advisors' short-term forecasting team believes that the reaction of the market last week was overdone and that the price of Brent crude will still reach $60 before the end of the second quarter. The team is holding a Flash Webinar on April 25 to present its forecast for oil prices, in conjunction with an explanation of the key drivers.

Stratas Advisors Whats Affecting Oil Prices This Week April 24 2017 Chart

The Brent-WTI differential continues to trade in the range between $2 and $2.50. The Brent-WTI differential started the week of April 17 at $2.29, then narrowed in the middle of the week to just above $2 before widening to close the week at $2.34 on April 19.

What's Affecting Oil Prices This Week? (April 10, 2017)

For the upcoming week, Stratas Advisors is forecasting that the price of Brent crude will move upward testing $56.60. The firm also expects that the Brent-West Texas Intermediate (WTI) differential will trade in the range of $2.50 and $3 with respect to the June contract.

Prior to the beginning of last week, Stratas Advisors forecast that the price of Brent crude would move upward and would test $54.50. The forecast was based on the expectation that fundamentals would continue to improve with the strengthening of demand. Furthermore, the firm expected the sentiment of oil traders would start to shift away from bearishness.

Stratas Advisors’ forecast aligned with the actual price movement. The price of Brent crude started the week at $52.83, then moved upward each day of the week to close at $55.24.

The upward movement was supported by the favorable weekly report from the Energy Information Agency, which showed that U.S. product inventories are continuing to decline and that product supplied to the U.S. market (a proxy for demand) indicates strengthening demand. Later in the week, additional support came from the U.S. attack on a Syrian airbase.

Oil Prices, Brent Crude, Forecast, Stratas Advisors, inforgraphic

The firm also forecast that the Brent-WTI differential would trade between $2 and $2.50 with respect to the June contract. In actuality, the Brent-WTI differential started the week at $2.23, then continued to widen through the week to close at $2.60. The widening at the end of the week was supported by the increase in the price of Brent crude resulting from the reaction to the U.S. attack on the Syrian airbase.

What's Affecting Oil Prices This Week? (April 3, 2017)

Before the beginning of last week, Stratas Advisors forecast that the price of Brent crude would be under pressure with support at $50. The forecast was based on the expectation that downward pressure would continue to come from the negative perception of supply resulting from the rebounding of shale-related production in the U.S. coupled with uncertainty about the duration of the OPEC-related production cuts. Furthermore, the firm expected the downward pressure to be at least partially offset by the relatively strong demand with signs that U.S. demand is picking up.

The forecast aligned well with the actual price movement that occurred last week in that the oil price did initially declined, but did not break below the $50 floor. The price of Brent crude then rebounded to reach $52.96 on Thursday before falling back slightly on Friday to close the week at $52.83.

The rebound in the price was supported by statements from the Saudi Arabia Energy Minister that implied openness to extending production cuts pass June. Additional support was provided by the favorable weekly report from the Energy Information Agency (EIA), which indicated a smaller than expected increase in crude inventories coupled with a significant reduction in inventories of gasoline and distillate fuel oil.

Stratas Advisors also forecast that the Brent-WTI differential would fall back into the range between $2 and $2.50 with respect to the June contract. The forecast aligned with the actual movement of the Brent-WTI differential. At the beginning of the week it was $2.83. It widened to $3.02 on Monday before narrowing in the second half of the week after the favorable inventory report from the EIA to close at $2.23.

For the upcoming week, Stratas Advisors is forecasting that the price of Brent crude will move upward, testing $54.50. The firm also expects the Brent-WTI differential will trade in the range of $2 and $2.50 with respect to the June contract

This report is taken from Stratas Advisors’ Short-Term Price Outlook service, which covers a period of eight quarters and provides monthly forecasts for crude oil, natural gas, NGL, refined products, base petrochemicals and biofuels.

What's Affecting Oil Prices This Week? (March 27, 2017)

For the upcoming week, Stratas Advisors is forecasting the price of Brent crude will be under pressure with support at $50. The firm also expects that the Brent-West Texas Intermediate (WTI) differential will fall back into the range of $2 and $2.50 with respect to the June contract.

Prior to the beginning of last week, Stratas Advisors forecasted the price of Brent crude would bounce along sideways with support at $50.80. The forecast was based on the expectation that signals of strengthening demand would offset the negative perceptions pertaining to supply.

The firm's forecast was aligned fairly well with the forecasted floor but was more optimistic than the actual price movement throughout the week. The price of Brent crude started the week March 20 at $51.76, then fell in the middle of the week to $50.46 before rebounding on March 24 to close at $50.90.

Downward pressure came from the Energy Information Agency, which reported crude inventories increased by 4.954 million barrels the previous week. Additional pressure came from oil traders continuing to decrease their net long positions with decreases in each of the last four weeks. 

Whats Affecting Oil Prices This Week Of March 27 2017 Graph

Stratas Advisors also forecasted the Brent-WTI differential would trade between $2 and $2.50 with respect to the May contract. With the increase in crude inventories, the Brent-WTI differential widened beyond the firm's expectations.

The Brent-WTI differential started the week at $2.45, widened to $2.71 on March 20, and narrowed on March 22 to $2.60 before widening again to finish the week at $2.83 on March 24. In comparison, the Brent-WTI differential at the end of February was at $1.58.

What's Affecting Oil Prices This Week? (March 20, 2017)

Before the beginning of last week, Stratas Advisors forecast that the price of Brent crude would continue to be under pressure with support at $50.90. The forecast was based on the expectation that oil traders would continue to reduce their net long positions.

Further downward pressure was expected from increasing geopolitical tensions in Asia stemming from the provocative actions of North Korea, and in Europe stemming from the growing concerns about Turkey. The downward pressure was expected to be partially offset from the strengthening of demand.

The firm’s forecast aligned with the actual price movement. The price of Brent crude started the week at $51.37 and then fell to $50.92 on March 14. The price rebounded in the second half of the week to close at $51.76.

The rebound in the price of Brent crude was the result of a positive weekly report from the Energy Information Agency (EIA). The report indicated that during the week before, inventories of crude oil in the U.S. declined by 237,000 barrels, which goes against the normal trend of increases in crude inventories during this time of year.

The inventory situation with respect to refined products was also supportive of the oil price. Inventories of gasoline decreased by 1.565 million barrels (MMbbl). Inventories of distillate fuel oil decreased by 4.229 MMbbl.

Stratas Advisors also forecast that the Brent-West Texas Intermediate (WTI) differential would continue to trade between $2 and $2.50 with respect to the May contract, which also aligned with the actual results. The Brent-WTI differential started the week at $2.34 then widened to $2.57 on March 14 before narrowing slightly through the remainder of the week to close the week at $2.45.

For the upcoming week, Stratas Advisors forecasts that the price of Brent crude will trade sideways with support at $50.90. It also expects that the Brent-WTI differential will continue to trade between $2 and $2.50 with respect to the May contract.

 

What's Affecting Oil Prices This Week? (March 6, 2017)

For the upcoming week, Stratas Advisors is forecasting the price of Brent crude will trade between $55 and $56. The firm also expects the Brent-West Texas Intermediate (WTI) differential will trade between $2 and $2.50 with respect to the May contract.

Before the beginning of last week, Stratas Advisors forecasted the price of Brent crude would trade between $56 and $57. The forecast was based on the expectation that the demand side of the equation would supply support for the oil price and would counteract the downward pressure from the expectations of a strong U.S. dollar.

The firm's forecast proved to be slightly more optimistic that the actual price movement. The price of Brent crude started the week on Feb. 27 at $55.99 and then stayed essentially flat before reaching $56.36 on March 1. The oil price then tumbled on March 2 to $55.08 before rebounding on March 3 to close the week at $55.90.

The dip in the oil price was partially the result of the U.S. dollar strengthening on March 2, moving to 1.051 with respect to the euro. Indications that Russian production remained unchanged in February in comparison with January did not help the oil price.

In addition, Stratas Advisors forecasted that the Brent-WTI differential would trade between $2 and $2.50 with respect to the May contract. In actuality, the Brent-WTI differential started the week at $2, then narrowed to $1.58 on Feb. 28 before widening on March 1 back to about $2, where it stayed until closing the week at $2.12.

Whats Affecting Oil Prices This Week March 6 2017 Graph

For more on other factors affecting oil prices this week visit StratasAdvisors.com.

What's Affecting Oil Prices This Week? (Feb. 27, 2017)

For the last few weeks we expected that the price of Brent crude would break above $56 and would continue to trade above $56. Last week the price of Brent crude did break above $56 early in the week, but the price fell back to $55.99 by the end of the week.

Some support for the oil price stemmed from oil traders continuing to increase their net long positions. Meanwhile, the Brent-WTI differential continues to trade above $2 with respect to the April contract. Last week, the Brent-WTI differential started at $2.03 then widened to $2.33 early in the week before narrowing to close the week at $2. The narrowing of the Brent-WTI differential was the result of the price of Brent crude pulling back later in the week, and with U.S. crude inventories only increasing by 564,000 barrels.

For the upcoming week we are forecasting that the price of Brent crude will trade between $56. and $57. We are also expecting that the Brent-WTI differential will trade between $2 and $2.50 with respect to the May contract.

 

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