What's Affecting Oil Prices This Week? (April 10, 2017)
For the upcoming week, Stratas Advisors is forecasting that the price of Brent crude will move upward testing $56.60. The firm also expects that the Brent-West Texas Intermediate (WTI) differential will trade in the range of $2.50 and $3 with respect to the June contract.
Prior to the beginning of last week, Stratas Advisors forecast that the price of Brent crude would move upward and would test $54.50. The forecast was based on the expectation that fundamentals would continue to improve with the strengthening of demand. Furthermore, the firm expected the sentiment of oil traders would start to shift away from bearishness.
Stratas Advisors’ forecast aligned with the actual price movement. The price of Brent crude started the week at $52.83, then moved upward each day of the week to close at $55.24.
The upward movement was supported by the favorable weekly report from the Energy Information Agency, which showed that U.S. product inventories are continuing to decline and that product supplied to the U.S. market (a proxy for demand) indicates strengthening demand. Later in the week, additional support came from the U.S. attack on a Syrian airbase.
The firm also forecast that the Brent-WTI differential would trade between $2 and $2.50 with respect to the June contract. In actuality, the Brent-WTI differential started the week at $2.23, then continued to widen through the week to close at $2.60. The widening at the end of the week was supported by the increase in the price of Brent crude resulting from the reaction to the U.S. attack on the Syrian airbase.