In the week since our last edition of What’s Affecting Oil Prices, Brent prices averaged $71.27/bbl last week, up $3.43/bbl from the week before.
WTI rose similarly, up $2.94/bbl to average $66.04/bbl. Prices were supported by fears around implications for a U.S. airstrike in Syria and by positive fundamental data from the recently released OPEC and IEA monthly oil market reports. This week prices will likely remain supported, with Brent averaging $70/bbl.
Geopolitical: Positive
Fears were that the joint U.S.-French-British airstrikes could lead to further escalation and retaliatory attacks within the region, leading to an increase in prices, but so far the international reaction to strikes has been muted. Analysts expect geopolitical risks to remain front-of-mind through the week. Regardless of the actual events that transpire, the fact that prices were so sharply impacted by a geopolitical event in which relatively little crude volumes were actually at risk is evidence that global balances are generally considered to be tighter by market participants.
Dollar: Neutral
Fundamental and sentiment-related drivers continue to have more impact on crude oil prices. The dollar fell slightly last week while Brent and WTI both increased.
Trader Sentiment: Positive
Nymex WTI managed money net long positioning fell back last week while ICE Brent managed money net long positioning increased. Overall positioning in both contracts remains supportive. Given the strong geopolitical drivers of the last week, ICE Brent is likely to see more support than Nymex WTI positioning in the week ahead.
Supply: Negative
According to Baker Hughes, the number of U.S. oil rigs rose by seven last week. U.S. oil rigs now stand at 815, compared to 683 a year ago. Evidence of renewed global oversupply continues to pose the greatest threat to prices.
Demand: Positive
U.S. consumption of petroleum products remains generally at or above seasonal averages in all products, including fuel oil. Economic indicators so far presage strong consumer spending through the summer demand season, and refined product demand is likely to remain a supportive factor in the short term.
Refining: Neutral
Margins fell across the board last week, with the largest declines seen in Brent-based values after Brent rose $3.43/bbl. Margins in Singapore generally saw the smallest decline with Dubai cracking falling $0.31/bbl and Dubai hydroskimming falling $0.60/bbl.
How We Did
Recommended Reading
Mitsubishi Makes Investment in MidOcean Energy LNG
2024-04-02 - MidOcean said Mitsubishi’s investment will help push a competitive long-term LNG growth platform for the company.
The OGInterview: Petrie Partners a Big Deal Among Investment Banks
2024-02-01 - In this OGInterview, Hart Energy's Chris Mathews sat down with Petrie Partners—perhaps not the biggest or flashiest investment bank around, but after over two decades, the firm has been around the block more than most.
Kissler: OPEC+ Likely to Buoy Crude Prices—At Least Somewhat
2024-03-18 - By keeping its voluntary production cuts, OPEC+ is sending a clear signal that oil prices need to be sustainable for both producers and consumers.
TPG Adds Lebovitz as Head of Infrastructure for Climate Investing Platform
2024-02-07 - TPG Rise Climate was launched in 2021 to make investments across asset classes in climate solutions globally.
JMR Services, A-Plus P&A to Merge Companies
2024-03-05 - The combined organization will operate under JMR Services and aims to become the largest pure-play plug and abandonment company in the nation.