At the beginning of last week Stratas Advisors' forecast said that the price of Brent crude would approach $48.50 per barrel (bbl). The forecast was based, in part, on the expectation that oil traders were shifting back to a more optimistic view of the oil market with the renewed rumors of a potential OPEC deal, which would reduce oil production.

Stratas also expected additional support from elevated crude runs because of relatively wide crack spreads.

Together, the firm expected these factors would partially outweigh the impact of the strong U.S. dollar.

Stratas' forecast aligned with the direction of the actual price movements, and in fact, the price of crude oil moved more positively than forecast until the end of the week. The price of Brent crude started the week at $46.86/bbl then jumped to $49.12/bbl by the middle of the week and stayed near $49/bbl before falling back on Nov. 25 to close the week at $47.24/bbl. The movement of the oil price followed the news associated with the potential OPEC deal.

The significant decline on Nov. 25 (3.59%) appeared to stem from the news that Saudi Arabia would not be attending the meeting on the upcoming Nov. 26 with non-OPEC-producers. News that Saudi Arabia was intending to increase exports to Asia in January further dampened the oil market.

Stratas also forecast that the Brent-WTI differential would continue to trade between 50 cents and $1 with respect to the January contract. In actuality, the Brent-WTI differential started the week at 50 cents then jumped to $1.09 on Nov. 22, and stayed in the vicinity of $1 before widening on Nov. 25 to close the week at $1.18.

For the upcoming week Stratas is forecasting that the price of Brent crude will stay relatively flat for the first part of the week and then decline with support at $45.50/bbl. The firm is also forecasting that the Brent-WTI differential will continue to trade between $1 and $1.50 with respect to the February contract.