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

Brent oil fluctuated around $68 and came close to $70, spurred by a decline in oil stocks. However, prices at around $70 could be a possibility next week based on predictions of rises in the U.S. dollar index this week.

On the other hand, prices have settled down with the decreased possibility of oil disruptions in Iran’s exports from the recent unrest.

Although oil prices were tempered with the ending of disruptions in Iran, OPEC and non-OPEC participating countries’ oil cut agreement along with an increase in global oil demand have sustained higher pricing levels.

Nonetheless, the U.S.’ limited oil production increases, as well as the fact that there was no change to new U.S. oil rig counts, signaled a threat to the upward price trend.

If the declining trend in global oil stocks continues in the first half of 2018, oil prices could reach $80 after the average five-year surplus in OECD stockpiles is alleviated. 

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 started the week on Tuesday, Dec. 25 with a fall to $66.57 with the resumption of operations of oil pipelines in the U.K. and Libya.

However, the decline of 4.99 million barrels in U.S. oil inventories, as detailed in the weekly API report, contributed to the increase to $67.84 on Wednesday.

The price continued its ascent to $68.07 with a decrease in the U.S. dollar index as well as the weekly drop of 7.41 million barrels in U.S. commercial oil inventories, according to the EIA’s weekly report on Thursday.

However, it recaptured some of its losses and settled at $67.62 at the end of the week owing to a rise in the U.S. dollar index. 

Oil inventories in OECD countries have been on a downward trend especially since the second half of 2017 and there is still a surplus over the five-year average of 111 million barrels in October, according to the International Energy Agency Monthly Oil Market (IEA) report on Dec. 14, 2017. U.S. inventory drawdowns since last April have been one of the main contributors to such a decline in OECD oil stockpiles.  The next reports are expected to show more decreases in OECD stocks due to outages from the temporary closure of pipelines in the U.K. and Libya. This promises to support the upward curve in oil prices in the next months.   

The U.S dollar index is set to temporarily increase with the publication of U.S. financial market data this week. As a result, pressure will be placed on oil prices.

Oil markets will continue to focus on changes in U.S. oil production and commercial oil inventories, which will come under pressure from a relatively high U.S. dollar index this week. Therefore, Brent oil is likely to range between $67 and $69 this week.

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