Oil Price Performance Over the Week:
Oil price fell sharply early last week on higher oil supply expectations. Brent Crude and WTI fell by more than 5 percent during the first two days of trading to around $71/bbl and $67/bbl respectively.
The fall in crude oil price was mainly driven by the return of crude oil supply from Libya, U.S./China trade tension, Russian Energy Minister’s comments to further increase Russia’s oil output and news of Saudi Arabia’s oil output increase of more than 400,000 barrels per day as reported in The Organization of Petroleum Exporting Countries (OPEC)Â Monthly Oil Market Report for July 2018.
Brent Crude Oil Price
The fall in oil price was further supported by a massive increase in U.S. crude oil inventories of around 5.8 million barrels as well as an increase of 100,000 barrels in U.S. crude oil production as reported by the Energy Information Administration putting the United States crude oil production at a record high of 11 million barrels per day.
Despite the down pressure, crude oil prices closed the week higher by more than 1 percent on July 20 as a result of weakening U.S. dollar, lower expected August crude oil exports from Saudi Arabia which supported the market, as well as a decline in the number of rigs drilling for oil in the United States by 5 rigs to 858 rigs.
Brent Crude and WTI closed last week around $73.07/bbl and $65.86/bbl respectively.
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 July 23:
The Week Ahead for Crude Oil:
Last week was a bad week for oil price as oil prices fell sharply and closed the week lower than the level it was at a week ago. This week however seems to be much better for oil prices than the previous week.
Looking at last week oil market data and news and the current state of the oil market, oil is set for a slightly positive week ahead with a moderate upward movement driven by a weakening U.S. dollar and a decline in the number of rigs drilling for oil in the United States. In addition, positive comments coming from Saudi Arabia with regards to a lower crude oil exports for August are also expected to provide some support to oil prices this week.
On the other hand, the pressure to oil price this week is expected to come from various factors and data that will be published next week which include but not limited to an increase in U.S. crude oil inventories and crude oil production and renewed concerns over supply growth.
The overall outlook for crude oil prices next week is positive and crude oil futures are expected to be traded higher by 1 to 2 percent throughout the week unless oil prices were pressured down by negative data and sentiments which could be published next week.
Oil Prices Movers to Watch for This Week:
- API and EIA data of U.S. crude oil inventories, (Tuesday & Wednesday)
- U.S. dollar movement
- U.S./China trade war news
- U.S. crude oil production data, (Wednesday)
- Oil and gas companies’ Q2 2018 financial results
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.
