In the week since our last edition of What’s Affecting Oil Prices, Brent fell $0.54/bbl last week to average $73.11/bbl while WTI fell $0.89/bbl to average $67.91/bbl.

The Brent-WTI spread now stands at slightly over $5/bbl after getting as tight as $2.61/bbl in the second-half of July. We expect the spread to widen further as WTI loses support from the Syncrude outage. We expect Brent to average $73/bbl in the week ahead with no strong supporting factors apparent.

Iraqi production volumes and exports are reportedly coming in at record levels this summer which should help assuage fears of a supply shortage. In Asia, Chinese bookings of U.S. crude fell sharply after Beijing announced that U.S. crude would be subject to a 25% tariff. However, as analysts expected would happen, other locations took the opportunity to absorb additional volumes, with Indian purchases of U.S. crude nearly tripling from July to August of this year. The most recent tariff list released by Beijing removed U.S. crude, so Chinese volumes could again increase in coming months. If Indian and Chinese purchases both remain strong heading into fall, this will be a positive for U.S. prices, which typically weaken as domestic refining runs seasonally decline.

Geopolitical: Neutral

Geopolitics will be a neutral factor in the week ahead.

Dollar: Neutral

The dollar will be a neutral factor in the week ahead as fundamental and sentiment-related drivers continue to have more impact on crude oil prices.

Trader Sentiment: Neutral

Supply: Neutral

Supply will be a neutral factor in the week ahead. While some concerns remain about medium term supply given upcoming sanctions against Iran, Iraqi production and exports have been setting records this summer, which is likely to alleviate some fears.

Demand: Positive

Demand will be a positive factor in the week ahead. If Indian and Chinese purchases of US crude remain strong heading into fall, this will be a positive for US prices, which typically weaken as domestic refining runs seasonally decline.

Refining: Positive

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