Last week Stratas Advisors expected Brent crude would trade between $45 and $47. The expectation was based, in part, on signs oil traders were shifting to a more moderate slant. Data from the Commodity Futures Trading Commission (CFTC) and Intercontinental Exchange (ICE) indicate traders are adding to their net long positions at a tepid pace.
Actual price movement aligned closely with the firm’s expectations. At the beginning of the week the price of Brent crude was $48.14, but quickly fell to $45.30 on Monday, then hovered around $45 before closing the week at $45.37.
Downward pressure came from a larger than expected build in crude oil inventories, with crude inventories increasing by 2.78 million barrels during the previous week, as reported by the Energy Information Agency (EIA).
Stratas Advisors also expected the Brent-WTI differential would trade between 20 cents and $1 with respect to the July contract. In actuality, the Brent-WTI differential started the week at $2.21 but narrowed sharply on Monday to 35 cents, and then narrowed further to close the week at 5 cents.
For the upcoming week Stratas Advisors expect Brent crude oil will trade between $43 and $46. Additionally, The firm is forecasting the Brent-WTI differential will trade between minus 20 cents and 50 cents with respect to the July contract.
For the full rationale supporting this outlook, visit StratasAdvisors.com.
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