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