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.
Geopolitical: Positive
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.
Dollar: Negative
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: Neutral
Supply will be a neutral factor in the week ahead as medium term concerns about supply are offset by strong U.S. production.
Demand: Positive
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: Positive
Refining will be a positive factor in the week ahead, supported by strong product demand.
Recommended Reading
Solar Sector Awaits Feds’ Next Move on Tariffs
2024-04-25 - A group of solar manufacturers want the U.S. to impose tariffs to ensure panels and modules imported from four Southeast Asian countries are priced at fair market value.
Chevron’s Tengiz Oil Field Operations Start Up in Kazakhstan
2024-04-25 - The final phase of Chevron’s project will produce about 260,000 bbl/d.
ProPetro Ups Share Repurchases by $100MM
2024-04-25 - ProPetro Holding Corp. is increasing its share repurchase program to a total of $200 million of common shares.
Segrist: The LNG Pause and a Big, Dumb Question
2024-04-25 - In trying to understand the White House’s decision to pause LNG export permits and wondering if it’s just a red herring, one big, dumb question must be asked.
Baker Hughes Hikes Quarterly Dividend
2024-04-25 - Baker Hughes Co. increased its quarterly dividend by 11% year-over-year.