Before the beginning of last week we forecasted that the price of Brent crude would trade in the range between $55 and $56. The forecast was based, in part, in the expectation that while the US dollar would be supportive of higher oil prices because of its further weakening, the impact would be offset by deteriorating supply/demand conditions.

The expected deterioration was stemming from the mixed situation pertaining to supply because of the rebound in U.S. production, which is partially offset by the decline in OPEC production.

Furthermore, demand outlook was also seen to be waning, which is indicated by the increasing product inventories at the major trading hubs in the U.S., Europe and Asia.

Our forecast aligned closely with the actual price movement. The price of Brent crude started the week at $55.49 and then remained relatively unchanged through the week before closing at $55.52. We also forecasted that the Brent-WTI differential would trade between $2 and $2.75 with respect to the March contract. The Brent-WTI differential started the week at $2.27 then widened on Monday to $2.48, but then stabilized before closing at $2.35.

For the upcoming week we are forecasting that the price of Brent crude will trade between $54.50 and $56. We are also expecting that the Brent-WTI differential will trade between $2.25 and $3 with respect to the April contract.

What is affecting oil prices this week? Stratas Advisors’ John Paisie has the rundown in this week’s video.