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