What’s Affecting Oil Prices This Week? (Nov. 15, 2021)

Because of the strength of the U.S. dollar, concerns about inflation, and the uptick in COVID cases, Stratas Advisors expects oil prices will have a downward bias, the firm said in its latest forecast.

John E. Paisie, Stratas Advisors
What’s Affecting Oil Prices This Week? (Nov. 15, 2021)

A recent change in policy and increasing concerns about inflation is increasing the probability of the Federal Reserve moving quicker in raising interest rates—and the expectations are providing upward support for the U.S. dollar, says Stratas Advisors. (Source: Shutterstock.com)

Last week, crude oil prices declined for the third straight week. The price of Brent crude ended the week at $81.95 after closing the previous week at $82.55. The price of WTI ended the week at $80.69 after closing the previous week at $81.17.

Additionally, there were more developments coming from COP26, which ended on Nov. 12. Another development worth noting is the reaction of some climate activists to the increased focus on electric vehicles (EVs). These activists are pushing back against EVs, in part, because of the concerns associated with ramping up the production of metals, such as cobalt and lithium, but also because of concerns associated with any type of private vehicle—concerns such as congestion and safety for bicyclists and pedestrians. These activists are pushing for more support of public transportation, biking and walking—and not infrastructure for EVs.

Meanwhile, as we have been forecasting for several months, the US dollar continues to strengthen, as indicated by the U.S. Dollar Index closing last week at 95.12 from the previous week of 94.32. The U.S. dollar has rebounded significantly since reaching a low of 89.64 on May 25 and is now at the highest level of all year—and the highest level since July 2020. We have been forecasting that the U.S. Dollar Index will continue to increase through the rest of the year and will approach 96.00. The stronger U.S. dollar will put downward pressure on oil prices. Last week, the Federal Reserve announced plans for initiating the reduction of its $120 billion in monthly bond purchases. This change in policy and increasing concerns about inflation is increasing the probability of the Federal Reserve moving quicker in raising interest rates—and the expectations are providing upward support for the U.S. dollar.

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