Month: March 2018

The most significant news driving the oil markets last week came from Washington, where major policy and personnel shifts drove the markets down and up last week. Crude posted its biggest weekly gain since July on Friday as President Trump changed his national security team, fueling speculation sanctions on Iran will be re-imposed. Earlier in the week, the President’s imposition of new tariffs on imports had observers talking about a tariff war that could cut the demand for oil as economies slipped. Indications from the Saudis and Russians that the OPEC production freeze could be extended into 2019 helped lift prices earlier in the week.

Oil prices closed on Friday at $66.21 in London and $66.34 in New York. Prices are about in the middle of the trading range where they have been since mid-February. The markets, torn between increasing US shale oil production and what is thought to be increasing global demand, seem likely to stay within this narrow range until there is convincing evidence one way or the other. While prices have climbed by more than 40 percent since the middle of 2017, day-to-day volatility has fallen to its lowest level since 2014.

It was a volatile week with oil prices climbing slowly on Monday and Tuesday, falling by over $2 a barrel on Wednesday and Thursday, and then rebounding to close down about 50 cents for the week on Friday. As has become normal of late, the up days were largely driven by expectations of increasing demand and the down days by fears of a shale oil glut. New York oil has been bouncing around in the low to mid-$60s since mid-January while London futures have been trading some $3-4 higher.

Oil prices fell sharply last week ending up at $61.25 in New York and $64.37 in London. A higher than expected increase in crude stocks and gasoline was the impetus for the decline. An unexpected decline in Chinese economic activity, likely due to the winter holiday, did not help the outlook for oil nor did President’s Trump’s announcement of new tariffs and the remark that “trade wars are good, and easy to win” did not help the outlook for oil prices. US oil production and the oil-rig count continue to climb slowly. Talk in Washington of crippling new sanctions on Venezuela which would likely remove still more of its oil from the export stream did not help the situation.