Oil Price Fundamental Weekly Forecast- Prices Could Jump if Trump Decertifies Iran Deal

U.S. West Texas Intermediate and international-benchmark crude oil finished the week sharply lower, putting an end to the multi-week rally. Traders said that profit-taking and concerns over the global supply glut were the catalysts behind the selling pressure.

December WTI Crude Oil settled at $49.65, down $2.30 or -4.43% and January Brent Crude Oil closed at $55.36, down $1.23 or -2.17%.

The price action in the crude oil market last week was primarily driven by reports in the U.S. of record crude exports and efforts led by OPEC and Russia to cut production.

According to the U.S. Energy Information Administration (EIA), crude oil exports jumped to 1.98 million barrels per day (bpd) the week-ending September 29, surpassing the 1.5 million bpd record set the preceding week.

The EIA also said crude inventories fell 6 million barrels, compared with analysts’ expectations for a decrease of 756,000 barrels. Gasoline stocks rose 1.6 million barrels compared with analyst expectations for a 1.1 million-barrel gain. Distillate stockpiles fell 2.6 million barrels, versus expectations for a 1.8 million-barrel drop.

Volatility hit the markets late in the week. The market rose after Russian President Vladimir Putin said that the pledge between OPEC and other producers including Russia to cut oil output could be extended to the end of 2018, instead of expiring in March 2018.

Crude oil price tumbled, however, on Friday after Russia clarified remarks on the oil market made by President Putin earlier in the week, saying he did not propose extending a global oil output cut deal but said he recognized it was a possibility.

In other news, oilfield services firm Baker Hughes reported the number of oil rigs operating in U.S. fields fell by 2 in the latest week. The rig count stood at 748, compared with 428 at this time last year.

Forecast

The markets could face follow-through selling early this week as investors will have a lot of external factors to digest.

Investors will get the opportunity to react to the impact of hurricane Nate which made landfall over the week-end near Mississippi and Alabama. The biggest impact could be on gasoline prices, depending on how many refineries were forced to shut down.

Oil prices could jump if the White House decertifies the Iran deal. On October 12, President Trump is expected to deliver a key speech on Iran policy. If the chooses to unravel the international deal then prices could rally because U.S. sanctions would then limit the amount of Iranian oil hitting the market.

Concerns over increased U.S. production could limit gains or weigh on prices.