- The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy
Last week, even though Brent oil reached over $71, the rebound in U.S. oil production, the recent increases in U.S. oil rigs, as well as the slowing decline in oil inventories, ensured that prices over this threshold were not maintained.
The rise in U.S. oil production eventually impacted the recent surge in oil prices and signaled a threat to the oil supply cuts of OPEC and non-OPEC countries.
However, a weaker U.S. dollar continues to support oil prices ahead of the U.S. Federal Open Market Committee (FOMC) meeting this week.
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 started the week with a rise to $69.03 through a fall in the U.S. dollar and a five oil rig count decline in the U.S. from the previous week.
It surged to $69.96 with a drop in the U.S. dollar index on Tuesday.
It continued its ascent to $70.53 through a decline of 1.07 million barrels in U.S. oil inventories, as detailed in the weekly EIA report and further declines in the U.S. dollar index on Wednesday.
On Thursday, the price slid down to $70.42 owing to a rise in the dollar index and a boost in U.S. crude oil production from the previous week ending Jan. 19 by 128 thousand barrels per day to 9.87 million barrels per day.
However, it increased and settled at $70.52 at the end of the week with a slump in the U.S. dollar index.
U.S. oil production on the verge of 10 million barrels per day dented the recent upward trend in oil prices. According to the EIA Short-Term Energy Outlook in January 2018, U.S. crude oil production is expected to reach about 10.3 million barrels per day in 2018. In addition, the International Energy Agency (IEA) Monthly Oil Market Report in January highlighted that U.S. crude supply would reach over 10 million barrels per day and surpass that of Saudi Arabia in 2018.
The recent decline in the U.S. dollar index is one of the most important effects on recent oil price hikes, and this is likely to continue for the foreseeable future.
Oil markets will closely follow the Fed’s FOMC meeting this week. The FOMC meeting on Wednesday will be the Fed Chair Janet Yellen’s last meeting. It is expected that no interest rate hike will be made at this particular meeting, but the more upbeat message that is anticipated could impact changes to the U.S. dollar index.
Oil markets will continue to focus on these changes and in U.S. oil production and commercial oil inventories. Brent oil is likely to move between $68 and $70 this week.
- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.