- The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy

Brent oil surpassed $65 only for a limited time last Tuesday as a result of the temporary closure of one of the largest oil pipelines in the U.K. The Forties North Sea pipeline shut down for repairs causing supply concerns in the market. The Federal Open Market Committee (FOMC) meeting on Wednesday saw widely anticipated hikes in the interest rate, which had put pressure on all commodity prices before its application. Furthermore, a surge in the ongoing rise of U.S. crude oil output signaled a threat to the oil cut efforts of OPEC and non-OPEC participating countries once again pressuring oil prices. Declines in the U.S. dollar index after Fed’ interest rate hike helped Brent oil sustain around the $63 mark amid the temporary closure of the Forties North Sea crude pipeline. In the meantime, OPEC and the International Energy Agency (IEA) released their monthly oil market reports last week, with revisions to their global oil supply forecasts.

Last week’s oil markets will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) oil inventories, weekly EIA crude oil production in the U.S. and the weekly U.S. Baker Hughes rig count.

Brent oil began the week with a surge to $64.69 as a result of the closure of the Forties North Sea pipeline that supplies around 450,000 barrels of oil per day and from a slight decline in the U.S. dollar index.

However, on Tuesday it dipped to $63.34 owing to an increase in the U.S. dollar index with high expectations that the Fed would raise the interest rate at the FOMC on Dec. 13.

The price continued down to $62.44 due to the boost in U.S. crude oil production by 73 thousand barrels to 9.78 million barrels per day for the week ending Dec. 8, as reported by the EIA.

However, it recuperated to $63.31 on Thursday and settled at $63.23 at the end of the week impacted by outages from the temporary closure of the Forties crude pipeline and the four oil rig count decline in the U.S., according to Baker Hughes data.

Both OPEC’s and the IEA Monthly Oil Market Reports reported no change in their global oil demand forecasts for 2017 and 2018, but both made some upward revisions for global oil supply. According to OPEC’s forecast, non-OPEC oil supply growth for 2017 now will be 0.81 million barrels per day, an upward revision of 0.15 million barrels day. Growth for 2018 will see 0.99 million barrels per day, an upward revision of 0.12 million barrels per day from the previous report. However, the IEA projects that growth in non-OPEC oil supplies will be 0.6 million barrels per day in 2017 and 1.6 million barrels per day in 2018.

Last Wednesday, Dec. 13, the Fed applied an interest rate hike at the FOMC as expected increasing its interest rate by 0.25 percentage points from 1.25 to 1.50. After this decision, the U.S. dollar index recuperated some of its gains. Nonetheless, the dollar is likely to continue to become weaker regardless of further interest rate hikes in 2018. As a result, oil prices are likely to continue to be supported by a weaker U.S. dollar in 2018.

The price of Brent oil will depend mostly on changes in U.S. oil production and will likely move in the narrow range between $63 and $64 this week. In the first quarter of 2018, Brent oil could move in the range between $60 and $65, but in the second quarter could reach up to as much as $70 per barrel.

- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.