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

Brent oil finally sustained over $55 per barrel through continued declines in the U.S. dollar index and with increased demand from the resumption of oil refineries in the U.S after Hurricane Harvey. The gradual decrease in the U.S. oil rig count, as well as positive results from OPEC and the Energy Information Administration (EIA) reports, which also supported the upward trend. However, recent price increases may be temporary since U.S. crude oil production after Hurricane Harvey is now on track to reach production levels seen prior to the storm.

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

Brent oil price began the week with a slight rise to $53.84 with a three-oil rig count decline as reported in Baker Hughes data from the previous week.

On Tuesday, the price continued its ascent to $54.27 as reported in OPEC’s monthly oil report, which also forecasts more oil demand in 2018. In August, OPEC saw a monthly output decline of 79 thousand barrels per day to 32.76 million barrels per day despite a slight rise in the U.S. dollar index and a weekly rise of 6.16 million barrels in U.S. oil inventories as detailed in the weekly API report.

The price further climbed to $55.16 on Wednesday through a sharp decline in the U.S. dollar index and rise in oil demand in the second quarter of 2017, according to the IEA’s monthly oil market report. This price increase was despite a rise of 5.88 million barrels in U.S. commercial oil inventories, according to the Energy Information Administration’s (EIA) weekly report and a large rise in U.S. crude oil production of 572,000 barrels per day to 9.35 million barrels per day for the week ending Sep. 8, as the EIA reported.

However, prices hit $55.47 and settled at $55.62 at the end of the week due to further declines in the U.S. dollar index and a plunge in the oil rig count by seven as reported by Baker Hughes.  

In brief, last week Brent oil climbed to $55.62 from $53.75 mainly through positive results in supply and demand in both the monthly OPEC and IEA reports.

The OPEC report highlights that the global oil demand increase in 2017 is anticipated to further grow by 1.42 million barrels per day with a rise revision of 50,000 barrels per day mostly from OECD countries and China. Furthermore, in 2018 world oil demand growth is expected to increase by 1.35 million barrels per day with an upward revision of 70,000 barrels per day while the growth in world oil supply has been revised down by 100,000 barrels per day to one million barrels per day.      

The IEA report noted that global oil demand increased significantly in the second quarter of 2017 by 2.3 million barrels per day compared the same quarter in 2016. World oil supply dropped by 720, 000 barrels to 97.7 million barrels per day in August because of a fall in non-OPEC countries’ production. Moreover, OECD commercial stocks remained steady in July although they are expected to grow.

This week, Brent oil could reach $57 should slumps in U.S. oil inventories occur and with a less-than-expected rise in U.S crude oil production, amid a weaker U.S. dollar index. If not, declines towards $55 are likely.

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