What's Affecting Oil Prices This Week? (Feb. 27, 2017)

Monday, February 27, 2017 - 12:24pm

For the last few weeks we expected that the price of Brent crude would break above $56 and would continue to trade above $56. Last week the price of Brent crude did break above $56 early in the week, but the price fell back to $55.99 by the end of the week.

Some support for the oil price stemmed from oil traders continuing to increase their net long positions. Meanwhile, the Brent-WTI differential continues to trade above $2 with respect to the April contract. Last week, the Brent-WTI differential started at $2.03 then widened to $2.33 early in the week before narrowing to close the week at $2. The narrowing of the Brent-WTI differential was the result of the price of Brent crude pulling back later in the week, and with U.S. crude inventories only increasing by 564,000 barrels.

For the upcoming week we are forecasting that the price of Brent crude will trade between $56. and $57. We are also expecting that the Brent-WTI differential will trade between $2 and $2.50 with respect to the May contract.