In the week since our last edition of What’s Affecting Oil Prices, Brent rose $2.22/bbl last week to average $74.03/bbl as WTI rose $1.51/bbl to average $67.64/bbl. We expect Brent to maintain its recent strength, averaging around $75/bbl this week.
Trade talks between Mexico and the U.S. have been ongoing throughout the weekend, as of this writing a breakthrough on a NAFTA agreement appears imminent. A newly revised and agreed-to NAFTA treaty would be supportive for prices as it bodes well for future demand by closing one front in the White House’s ongoing trade disputes.
On the geopolitical side, there will likely be headlines throughout the week about tensions with North Korea after Secretary of State Mike Pompeo abruptly canceled a planned visit. While the exchange of words is unlikely to lead to any concrete actions, it will highlight that this area of geopolitical risk is still very-much active.
Geopolitics will be a positive factor in the week ahead. North Korea continues to accuse the U.S. of inflammatory acts, and planning for an invasion, while some officials in the current Administration have publicly expressed frustration with North Korea’s lack of progress at denuclearization.
The dollar will be a negative factor in the week ahead as fears of emerging market weakness stemming from a strong dollar impact demand expectations and the dollar sees strength from a revised NAFTA agreement.
Trader Sentiment: Neutral
Trader sentiment will be a neutral factor in the week ahead.
Supply will be a neutral factor in the week ahead as medium term concerns about supply are offset by strong U.S. production.
Demand will be a positive factor in the week ahead. If Indian and Chinese purchases of U.S. crude remain strong heading into fall, this will be a positive for U.S. prices, which typically weaken as domestic refining runs seasonally decline.
Refining will be a positive factor in the week ahead, supported by strong product demand.
2023-10-05 - The shifting bank market is more based on company size, while regional banks remain the backbone of reserve-based lending.
2023-11-19 - Private Equity executives agreed that the investment space is in a healthier state than at the height of the shale boom and funding is available for “really good teams.”
2023-11-08 - A survey by law firm Haynes Boone found equity and free cash flow are expected to meet nearly half of oil and gas companies’ capital needs in the next 12 months.
2023-11-01 - The investment tax credit transfers, enabled by the U.S. Inflation Reduction Act, open up another revenue stream for renewable energy companies.
2023-10-03 - Private equity firms are seeking to make money through the drill bit and by buying noncore assets that large companies are shedding, while family offices are starting to make more aggressive moves.