In the week since our last edition of What’s Affecting Oil Prices, Brent continued its meteoric rise, increasing $3.19/bbl last week to average $84.96/bbl. WTI increased $2.86/bbl to average $75.12/bbl. Both crudes continue to be supported by concerns around supply tightness. Barring sudden fundamental support technical indicators indicate that a correction is coming. However, an emotionally driven rally can be difficult to time, and prices will likely remain supported through the week, but with a ceiling of $85/bbl.
Geopolitical: Positive
Geopolitics will be a positive factor in the week ahead. Concerns around supply tightness due to U.S. sanctions against Iran are a major factor behind current high prices. Reports that the White House is considering granting waivers could remove some price support but the effect is likely to be larger once waivers are actually granted.
Dollar: Neutral
The dollar will be a neutral factor in the week ahead. Fears that a strong dollar will impact emerging markets remain, especially after the Federal Reserve’s latest rate hike.
Trader Sentiment: Positive
Trader sentiment will be a positive factor in the week ahead as markets are concerned about a supply shortfall. WTI net longs have been falling as Brent net longs have risen, indicating that midstream constraints remain a concern in the U.S. market.
Supply: Positive
Supply will be a positive factor in the week ahead, as market sentiment is increasingly concerned about future supply.
Demand: Neutral
Demand will be a neutral factor in the week ahead.
Refining: Negative
Refining will be a negative factor in the week ahead. Margins have weakened significantly in recent weeks on higher crude prices and refiners will likely begin to reduce runs in advance of the seasonally slower winter season.
Recommended Reading
National Petroleum Council: A Realistic Path to Scaling US Hydrogen
2024-05-15 - A report by the National Petroleum Council, the culmination of about 18 months of work, offered 23 recommendations to help the hydrogen industry grow through 2050.
Under Siege: Industry Cuts Emissions Despite Biden's ‘Attack’ on E&Ps
2024-05-20 - IPAA Chairman and Elevation Resources CEO Steve Pruett shared insight on industry’s concerns over regulations carried out by an “alphabet soup” of agencies from the Environmental Protection Agency to the Federal Trade Commission.
US Republican Attorneys General Sue to Stop EPA's Carbon Rule
2024-05-09 - The rule, finalized by President Joe Biden's administration last month as part of an effort to combat climate change, was challenged in three lawsuits filed in the U.S. Court of Appeals for the District of Columbia Circuit.
Gaps in EU's Preparation for Potential Gas Crises, Auditors Say
2024-06-24 - Despite the EU's overall reliance on Russia dropping significantly, auditors say the EU is insufficiently prepared to weather a future gas crisis.
US Unveils Proposed Guidance for Clean Electricity Credits
2024-05-29 - Clean energy generation projects, including nuclear and geothermal, will be part of the Clean Electricity investment and production tax credits, which replaces the IRA’s investment and production tax credits.