Prior to the beginning of last week, Stratas Advisors expected that the price of Brent crude would remain under pressure with support at $48.60. The forecast was based, in part, on the firm’s expectations that downward pressure on the price of Brent crude would come from the strengthening of the U.S. dollar, the extent of supply and the weakening of refining margins.
Stratas Advisors’ expectations of pressure on the price of Brent crude aligned with the actual price movement. The price of Brent crude started the week at $50.54 then declined to $47.19 on June 16 before rebounding to close the week at $49.17.
The firm also expected that the Brent-WTI differential would trade between $0.50 and $1 with respect to the August contract. In actuality, the Brent-WTI differential started the week at $0.82 then narrowed to $0.45 on June 16 before widening on June 17 to close the week at $0.61. The Brent-WTI differential was driven, in part, by a lower drawdown in crude inventories in the U.S.
For the upcoming week, Stratas Advisors expects the price of Brent crude oil will be volatile this week and will trade between $48.50 and $51 with support being provided in the second half of the week from another drawdown in the crude inventories of the U.S. Read the firm’s rationale supporting this outlook.
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