- The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy
Brent oil price stayed above $66 supported by a weak U.S. dollar, a reduction in surplus OECD commercial oil inventories and geopolitical concerns, despite the negative oil price development, namely increases in U.S. oil production and stockpiles.
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 weekly U.S. Baker Hughes rig count.
Brent oil began the week with a decrease to $64.95 due to oil trade profiteering and based on the EIA drilling activity report, the growth of U.S shale oil supplies.
It continued down to $64.64 owing to a rise of 1.15 million barrels in U.S. oil inventories as detailed in the weekly API report on Tuesday.
However, it recovered to $64.89 with the decline in surplus OECD stocks, as reported by the IEA Monthly Oil Market Report.
It continued up to $65.12 on Thursday and settled at the end of the week at $66.21. Expectations were raised that a more U.S. hawkish foreign policy would emerge with the appointment of the new Secretary General, Mike Pompeo, and in particular the greater possibility of the termination of Iran’s nuclear deal.
OPEC and non-OPEC participating countries have been increasingly successful in removing the surplus in global oil inventories. The decline continues even though it is at a slower pace due to rising U.S. oil production. This lower inventory count has been the main driver of oil price increases since the second half of 2017.
According to the IEA Monthly Oil Market Report in March, the surplus over the five-year average in OECD commercial oil stockpiles in January 2018 was 53.6 million barrels compared to 55.6 barrels over the five-year average in December 2017. Furthermore, OPEC’s Monthly Oil Report for March states that the surplus over the latest five-year average in OECD commercial oil stocks was 50 million barrels in January 2018 compared to 109 million barrels over the five-year average in December 2017.
Brent oil will continue to move between $65 and $68 this week, amid a highly volatile U.S. dollar index stemming from the Federal Open Market Committee meeting under the first leadership of Fed Chair Jerome Powell.
- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.