A Look Back
In a week where the Bank of England voted 5:2 to increase the base interest rate by a further 0.5% to 5%, oil remained volatile with Brent Crude moving approximately 7% across the week.
Brent crude saw highs of $77/barrel and lows of $72/barrel, with West Texas Intermediate (WTI) moving from $72 down to $68 (falling 5.5%). Additionally, the military coup by the Wagner Group in Russia has cast further uncertainty onto the market.
Settlements were however agreed quickly, quashing any impact on the oil market. Nevertheless, with Russia remaining as the world’s 2nd largest oil exporter questions have been cast over the future direction of the market as any further military action in the country is likely to have vast impacts on oil prices, as seen in 2022.
One considerable benefit for British oil consumers is the relative stability of the Sterling ,1.27 versus the Dollar. Offering a welcome relief to British purchasers.
Looking Ahead
Brent crude has opened slightly higher on Monday 26th June at $74/barrel following the weekends events in Russia, however, given the short lived nature of the Wagner Group dissent no significant price increases are expected to result.
Nevertheless, the oil market looks set to continue to be influenced by bullish and bearish factors. Brent crude prices are now back to late-May levels seen prior to OPEC+’s most recent supply restriction, which analysts predict could lead to further cuts in August.
The US also announced higher Oil Stocks with exports falling below imports, which may continue to bring WTI prices down. OPEC released a statement; ‘oil demand will increase by 23% in 2045’. As fuel supplies deplete and demand grows there will be a steady increase in price over the next 20 years.
There will be watchful eyes on Crude oil Stocks this week as the US may look to rebuild stocks after last weeks larger than expected dip in volume.
The Tug of war between interest rates, and challenges to Putin’s 23yr reign will be this week’s price factor.
