Last Week Oil Price Overview
Crude oil prices movements were mixed last week between ups and downs, but the overall level of oil prices for the whole week was lower than the week before. Earlier last week Brent and WTI crude oil prices fell from above $50/bbl and $48/bbl to nearly $48/bbl and $46/bbl respectively. However, as we have expected that OPEC will keep sending positive signals to support oil prices, on Tuesday, Iran’s officials said the country is open to discussion about production ceilings in Algeria this September.
The news supported oil prices for sometime, but oil prices paired its gains following the EIA’s data which showed a surprise increase in U.S. crude stockpiles. More pressure to oil prices came from the news about expected additional oil output from Iraq following a completion of a deal between the Iraqi government and Kurds to reopen a 150k bpd Turkey-bound pipeline. The week ended with more pressure coming form Saudi Arabia’s oil minister who seemed to downplay the chances of an OPEC output freeze deal stating that the intervention in the oil market was not necessary and that no “discussions of substance” have been contacted yet.
Last Week Data/News & This Week Oil Price Forecast
The overall performance of oil prices this week is at a considerable risk of a further fall similar to the week before especially after Saudi oil minister’s discouraging comments last week. Despite the fact that U.S. crude oil production and rig count reports showed a decline of around 49,000 bbl/d and fall in U.S. rig count by 2 rigs last week, negative market sentiments will impact oil prices more this week. It should be noted that last week’s declines in U.S. oil production and rig count are more into a correction trend rather than a support to oil prices. Therefore its support to oil prices will be minimal.
Adding to the negative comments by the Saudi oil minister, last week’s increase in U.S. crude stockpiles, news of additional Iraqi output and the fact that Iraq’s OPEC leadership are unwilling to participate in any production ceiling efforts are all negative news that will put more pressure on oil prices this week.
Some downward pressure to oil prices this week could also come from strengthening U.S. dollar especially after the Feds implied probabilities of rate hikes in September, November, and December. The Feds also seem to be playing a similar game to OPEC’s in order to support the greenback by continuing to signal an expected rate hike since few months ago.
The overall oil prices outlook for this week is quite negative. Bent and WTI crude oil prices are at risk of losing 1% to 2% during the first two days of the week. Oil industry and market data for this week will further determine the overall direction of oil prices. And OPEC talk’s support to oil prices will gradually diminish. In fact, after the Saudis comments, the talk could put pressure on oil prices.
Stay ahead of oil prices movements by subscribing to the Weekly Oil Price Commentary published every Monday. Click here to subscribe.
Remark: The expectation of oil prices’ direction 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 direction 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.
