What's Affecting Oil Prices This Week (Dec. 18, 2017)?

Monday, December 18, 2017 - 10:57am

In the week since our last edition, Brent averaged $63.40 a barrel, receiving support from reports that the Forties Pipeline system would be closed.

 

For the upcoming week Stratas expects Brent prices to average $62.50 a barrel as trading activity slows heading into the Christmas and New Year holidays. They expect the Brent-WTI differential to average $6 a barrel.

Geopolitical - Neutral

Geopolitics will be a positive factor in the week ahead. Despite no immediate outages on the horizon, the few active hotspots that bear watching are more likely to hamper oil supply, further helping prices.

Dollar – Neutral

The dollar will be a neutral factor next week as crude oil remains more influenced by fundamental factors and sentiment .

Trader Sentiment – Positive

Trader sentiment will be a positive factor in the week ahead with net positioning near record highs and no technical indicators of Brent being oversold. Slowing activity heading into the winter holidays raises the risks of a price correction.

Supply – Positive

Supply will be a positive factor in the week ahead despite the IEA’s recent decision to raise its 2018 non-OPEC production estimate as the Forties pipeline outage disrupts supplies and lends support.

Demand – Positive

Demand will remain a positive factor in the week ahead as weekly US data indicates strong demand domestically and for exports. In Europe, total product stocks also continue to generally decline.

Refining - Neutral

Refining will be a neutral factor in the week ahead. Margins are healthy enough to support current run rates but have fallen seasonally and are unlikely to drive large increases in run rates.

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