Oil Price Collapse Overview:
Last week, oil price posted its biggest weekly loss in 2 years falling for five days straight. Crude oil futures fell by nearly 10 percent from this year January peak level, posting its steepest weekly decline since January 2016.
The oil price collapse during last week was due to continued market selloff and a stronger U.S. dollar aimed market turmoil, a renewed buildup in U.S. crude oil stockpiles, a worse-than expected oil production growth figure in the United States, and big jump in the number of rigs drilling for oil in the United States.
WTI Crude Oil Price for the Week Ending February 9, 2018
Brent crude and WTI closed last week on February 9, down by 8 percent and 9 percent respectively. Brent crude closed the week around $62.71 per barrel, while WTI closed the week well below $60 per barrel for the first time since December 2017.
Oil Market Data and Factors Influencing Oil Price Direction
Where is Oil Price Heading this Week?
Crude Oil Price and Factors Affecting its Direction for the Week Starting February 12:
The Week Ahead for Crude Oil:
Last week was a bad week for oil price, unfortunately, this week does not seem to be any better. Looking at last week oil market data and news and the current state of the oil market, oil is set for another difficult week ahead.
The pressure on oil price this week is coming from various factors including but not limited to a strong U.S. dollar, and renewed concerns over supply growth. The increase in U.S. crude oil production and crude oil inventories last week are also expected to continue to put high pressure on oil prices this week.
Adding to the pressure, last week data published by Baker Hughes of the increase in the number of rigs drilling for oil in the United States by 26 rigs to the week ending February 9 is also expected to further intensify the pressure on oil prices and could result in driving Brent crude below $60/bbl this week. The big jump in U.S. oil rig count signals that U.S. crude oil production growth is set for a continuous growth for months to come which could exceed current forecasts.
Looking ahead at oil price movement this week, Brent crude and WTI are expected to fall by 1 to 2 percent during the first two days of trading. Oil price could receive some support on Monday from OPEC Monthly Oil Market Report which is expected to show a better compliance from OPEC/non-OPEC members to production cut, however, this support will be offset by the current negative sentiments in the oil market.
On Wednesday through Friday, pressure on oil prices is expected to resume as the EIA and Baker Hughes’ data for this week are expected to show an increase in both U.S. crude oil production and oil rig count. Brent crude and WTI are expected to close this week down by approximately 3 percent. Will we see Brent crude below $60/bbl this week? Highly likely.
Oil Prices Movers to Watch for This Week:
- OPEC Monthly Oil Market Report (MOMR), (Monday)
- API and EIA data of U.S. crude oil inventories, (Tuesday & Wednesday)
- U.S. dollar movement, and stock market volatility
- U.S. crude oil production data, (Wednesday)
- Canada and U.S. oil rig count data, (Friday)
Remark: The expectations of oil prices movements in this commentary are based on the oil market data and news up until the time of writing this commentary. As the week starts, new data and news are reported and could influence oil prices differently. Therefore, the movements of oil prices cloud be different from what was expected here. It is important to stay updated with oil market data and events as they occur.
