Prior to the beginning of last week Stratas Advisors expected that the price of Brent crude oil would test the $50 level. The expectation was based, in part, on the upward pressure resulting from the disruption to the supply of crude oil associated with Canada because of the outbreak of wildfires, and Nigeria, because of because of militant attacks on platforms and pipelines. Meanwhile we expected the upward price movement would be moderated by the shift in the sentiment of oil traders away from bullishness and the strengthening of the US dollar.

The actual price movements aligned closely with expectations. The price of Brent crude started the week at $47.83 then reached $49.28 before falling back to close the week at $48.72. In the second half of the week, downward pressure was put on the price of Brent crude oil by an increase in the U.S. inventories of crude oil (in comparison with the expectation for a drawdown in inventories of crude oil) and the strengthening of the U.S. dollar.

Stratas Advisors also expected that the Brent-WTI differential would trade between 65 cents and $1.40 with respect to the July contract. In actuality, the Brent-WTI differential narrowed more than expectations. The Brent-WTI differential started the week at 93 cents, and then narrowed throughout the week to close at 31 cents.

For the upcoming week Stratas Advisors expects that the price of Brent crude oil will trade between $47 and $49 during the first part of the week, and then will move toward $50 later in the week. Additionally, the firm is forecasting that the Brent-WTI differential will trade between 5 cents and 45 cents with respect to the July contract.

Read the full rationale supporting this outlook.