Oil Price Fundamental Weekly Forecast – Sideways to Lower Trade with Stock Market Adding to Volatility

This week, we’re looking for a mostly sideways trade with the crude oil market underpinned by the OPEC-led production cuts and the U.S. sanctions against Venezuelan oil exports. Putting a cap on the market will be demand worries over slowing global economic growth and concerns over U.S.-China relations.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures both closed lower last week, but the U.S. market absorbed a bigger loss. While the OPEC-led production cuts continued to underpin prices because of their ability to trim the excess global supply, the shift in trader focus to demand issues clearly outweighed their influence.

For the week, March WTI crude oil futures settled at $52.72, down $2.54 or -4.60% and April Brent crude oil finished at $62.10 or -0.65 or -1.05%.

Crude oil prices rose at the start of trading last week, hitting their highest marks since November 21. Supporting prices early in the week were U.S. sanctions on Venezuela which helped keep investor focus on tighter global supplies. Prices were also supported by the news that oil supply from OPEC fell in January by the largest amount in two years, according to a Reuters survey.

Prices began to tumble and remained weaker throughout the week after the European Commission lowered its outlook for the Euro Zone economy and on renewed worries over a U.S.-China trade deal.

Late in the week, Brent crude oil received a boost on reports that the U.S. would not extend the exemptions to the countries allowed to buy Iranian crude oil.

U.S. Energy Information Administration Weekly Inventories Report

The Energy Information Administration (EIA) reported that U.S. crude stocks rose less than expected the week-ending February 1, while gasoline stocks increased and distillate inventories fell.

Crude inventories rose by 1.3 million barrels compared with analysts’ expectations for an increase of 2.2 million barrels. Gasoline stocks rose by 513,000 barrels, compared with analyst expectations for a 1.6 million-barrel gain. Distillate stockpiles fell by 2.3 million barrels, versus expectations for a 1.8 million-barrel drop, EIA data showed.

Weekly Forecast

This week, we’re looking for a mostly sideways to lower trade with the crude oil market underpinned by the OPEC-led production cuts and the U.S. sanctions against Venezuelan oil exports. Putting a cap on the market will be demand worries over slowing global economic growth and concerns over U.S.-China relations. The return of stock market volatility especially to the downside could also have a negative influence on prices. Another factor weighing on oil prices this week was a strong dollar.

The wildcard this week will be the impact of rumors that the United States will not renew the exemptions to the sanctions against Iranian oil exports. According to reports, U.S. Special Representative for Iran, Brian Hook, says Washington has no plans to extend waivers when the exemptions expire in May. “Iran’s oil customers should not expect new waivers to U.S. sanctions in May”, the top State Department official reiterated.

This news is particularly bullish for Brent crude oil because it will lead to a further reduction in crude oil supplies. This will help widen the spread between Brent and WTI crude oil.

Please let us know what you think in the comments below. 

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.