Due to the President’s Day holiday in the U.S., today’s edition of What’s Affecting Oil has been abbreviated. In the week since our last edition of What’s Affecting Oil Prices, Brent prices averaged around $63.68/bbl last week, within the expected range. Prices actually rose throughout the week after last week’s sharp correction.
Prices will likely average $65/bbl in the week ahead.
Geopolitical: Neutral
There is minimal news on the geopolitical front that is likely to influence prices this week. While perennial issues remain, such as the decline in Venezuela and unrest in Libya, Stratas Advisors do not expect them to become more impactful in the short term.
Dollar: Neutral
While the dollar declined throughout the week, potentially lending some support, fundamental and sentiment-related drivers continue to have more impact on crude oil prices.
Trader Sentiment: Positive
While trader sentiment has soured slightly over the last two weeks, technical indicate that there is now room to move to the upside. While some market participants will be understandably wary of the potential for U.S. crude to again overwhelm balances, there remain plenty of bulls out there to support prices in the near-term.
Supply: Negative
Supply will continue to weigh on prices in the weeks ahead, especially after last week’s report from the IEA in which the Agency warned that growth in U.S. supply could outstrip growth in demand this year.
Demand: Positive
U.S. consumption of petroleum products remains generally at or above seasonal averages in all products except fuel oil.
Refining: Negative
Global refining margins fell last week, and all enclaves outside of Europe are generally at or below the 5-year seasonal average. Slightly below average margins despite steady demand are likely to weigh on run rates and crude prices if they persist. However, falling prices could lend support to margins in future months as seasonal demand ramps up.
How We Did
Recommended Reading
Analysts: Diamondback-Endeavor Deal Creates New Permian Super Independent
2024-02-12 - The tie-up between Diamondback Energy and Endeavor Energy—two of the Permian’s top oil producers—is expected to create a new “super-independent” E&P with a market value north of $50 billion.
Sold in 66 Days: Inside the Diamondback-Endeavor Deal
2024-03-26 - Diamondback Chairman and CEO Travis Stice first offered “at least $25 billion” for Endeavor Energy Resources on Dec. 8. The deal closed just weeks later for $26 billion.
Daugherty: Diamondback Scales Up Amid Consolidation Super Cycle
2024-03-11 - It’s time for the strongest among the services sector to follow Diamondback's lead: find fortifying prey and hunt.
EIA: E&P Dealmaking Activity Soars to $234 Billion in ‘23
2024-03-19 - Oil and gas E&Ps spent a collective $234 billion on corporate M&A and asset acquisitions in 2023, the most in more than a decade, the U.S. Energy Information Administration reported.
ConocoPhillips CEO Ryan Lance: Upstream M&A Wave ‘Not Done’ Yet
2024-03-19 - Dealmaking in the upstream oil and gas industry totaled $234 billion in 2023. The trend shows no signs of slowing, ConocoPhillips CEO Ryan Lance said at the CERAWeek by S&P Global conference.