For the upcoming week, Stratas Advisors forecasts the price of Brent crude will trade between $56 and $57. The firm also expects the Brent-West Texas Intermediate (WTI) differential will trade between $2.25 and $3 with respect to the April contract.
Before the beginning of last week, Stratas Advisors forecast the price of Brent crude would test $58.
The forecast was based on the expectation that upward support for the price of Brent crude would stem from geopolitical concerns, further weakening of the U.S. dollar and more bullish sentiments of crude traders. The firm also expected upward support from an improving supply/demand situation with OPEC moving forward with production cuts and demand starting to pick back up.
In actuality, the price of Brent crude ended up about where it started the week. The price of Brent crude started the week at $56.81 on Feb. 6 then dropped below $56 and remained so until Feb. 10 when the price rebounded to finish the week at $56.70.
The price of Brent crude was negatively affected by the U.S. dollar strengthening instead of weakening. Further pressure came from the significant build in crude inventories in the U.S., which was reported by the Energy Information Agency (EIA) to have increased by 13.83 million barrels.
Stratas Advisors also forecast the Brent-WTI differential would trade between $2.25 and $3 with respect to the April contract the week of Feb. 6.
In actuality, the Brent-WTI differential started the week at $2.34 on Feb. 6 then narrowed with the drop in the price of Brent crude before widening to close the week at $2.37 on Feb. 10.
For more on other factors affecting oil prices this week visit StratasAdvisors.com.