In the week since our last edition of What’s Affecting Oil Prices, Brent prices were nearly flat, up only 37 cents to average $77.56/bbl. WTI prices saw more support, rising nearly $2 to average $73.71/bbl.
The week ahead will see both prices continue to climb on higher demand and myriad supply outages. We expect that Brent prices will likely average at least $78/bbl in the week ahead, while WTI could potentially reach $75. We reiterate that the strength in WTI is likely temporary, driven primarily by a production outage in Canada.
Geopolitics will be a positive factor in the week ahead as fighting in Libya and sanctions against Iran are supporting prices.
The dollar will be a neutral factor in the week ahead as fundamental and sentiment-related drivers continue to have more impact on crude oil prices.
Trader Sentiment: Neutral
Trader sentiment will be a neutral factor in the week ahead, with fundamentals providing more direction to crude prices.
Supply will likely be a marginally positive factor in the week ahead with Venezuelan, Iranian, Libyan and Syncrude volumes all constrained.
Demand will be a neutral factor in the week ahead as rising prices fail to stymie demand but also do not create opportunities for strong growth.
Refining will be a neutral factor in the week ahead with margins, especially in Asia, continuing to fall on higher crude prices and more regional product supply.
How We Did
The Federal Energy Regulatory Commission (FERC) today approved the Driftwood LNG and Pipeline projects, and the Port Arthur LNG and Pipeline projects.
OPEC and other producers including Russia have gradually tightened supply through 2019 to reduce a global glut. OPEC and its partners may not renew the curbs when they expire after June because of the risk of over-tightening the market.
In the week since our last edition of What’s Affecting Oil Prices, Brent rose $1.68/bbl last week to average $71.16/bbl, almost perfectly in line with our expectations.