What's Affecting Oil Prices This Week (May 15, 2017)?
Before the beginning of last week Stratas Advisors forecast that the price of Brent crude would move back above $50 and would test $50.80. The forecast was based on the expectation that geopolitics would be supportive with Macron winning the French presidential election. The firm also expected that the weekly report from the Energy Information Agency (EIA) would be more supportive. In actuality, the price movement of Brent crude aligned closely with our forecast.
The price of Brent crude started the week at $49.10 and then moved downward to $48.73 on Tuesday before bouncing above $50 on Wednesday. The price of Brent crude moved upward through the rest of the week to close the week at $50.84.
The weekly report from the EIA was even more favorable than expected. The report indicated that inventories of crude in the US declined by 5.25 million barrels (MMbbl), while inventories of gasoline dropped by 150,000 bbl, and inventories of distillate fuel oil fell by 1.59 MMbbl.
Stratas also forecast that the Brent-WTI differential would trade in the range of $2.30 and $2.80 with respect to the July contract. The Brent-WTI differential started the week at $2.50 and stayed essentially unchanged through Wednesday then widened to close the week at $2.67.
For the upcoming week, Stratas Advisors forecasts the price of Brent crude will move upward and will test $53.60. The firm also expects that the Brent-WTI differential will trade in the range of $2.30 and $2.80 with respect to the July contract.