In the week since our last edition of What’s Affecting Oil Prices, Brent fell $1.29/bbl last week to average $71.82/bbl as WTI fell $1.79/bbl to average $66.12/bbl. The Brent-WTI spread widened slightly more to end the week at $5.92/bbl. We expect Brent to continue falling next week, to average $68/bbl.

Sentiment will continue to sour against crude futures, especially in the U.S. as demand seasonally slows and production remains strong. Internationally, attention remains focused on trade talks between the U.S. and multiple counterparties. Beijing is sending a trade envoy to Washington, D.C. for the first time in several months, and rumors indicate that Mexico and the U.S. are close to a preliminary deal on NAFTA. While the usual melting pot of simmering geopolitical issues could certainly crop up, there are no developments expected this week. Emerging markets will also remain an area of focus, after the volatility in Turkey and fears around contagion pulling down the rupee and other currencies.

Geopolitical: Neutral

Dollar: Negative

Trader Sentiment: Negative

Supply: Neutral

Supply will be a neutral factor in the week ahead as medium term concerns about supply are offset by strong U.S. production.

Demand: Positive

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

Refining: Positive

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