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This week was quite unstable for the oil. A rise was followed by a fall and vice versa during the whole week. So let's look at the events that created such oil volatility.
After the continuation of the last week rise, the oil was falling on Tuesday and Wednesday. The reasons were hidden in the recovering US dollar and anticipated growth of the US production. This week the greenback could find support. Fed’s meeting minutes that strengthened the confidence of soon rate hikes supported the dollar even more. So the oil prices were traded near such lows as WTI - $61 a barrel, Brent - $65 a barrel.
However, the anticipated rise of the US crude oil inventories was not proved. The data was unexpectedly low that led to the surge of the oil. So the prices appeared close to the highest in two weeks.
The US crude stockpiles fell to 1.62 million barrels last week. It was the biggest fall in five weeks. The average forecast was at 2.2 million.
But the data was mixed. The US exports reached 2 million barrels a day, the highest figure since October 2017. Net imports fell below 5 million barrels a day. It put pressure on the oil. During Friday the oil prices were volatile, but they could stabilize and go further.
Stabilization of the oil is based on the significant support from the OPEC and Russia with their output cuts. According to tanker-tracker Oil Movements’ forecast, the exports are anticipated to decline by 300,000 barrels a day to March 10. Moreover, experts are talking about the prolongation of the cuts. According to the International Energy Agency the supply from North America, Brazil and Mexico can cover global demand growth for the next two years. So it will force OPEC and Russia to expand the cuts for longer than it is planned now (until the end of 2018).
Making a conclusion, we can say that at the moment the prices have stabilized: WTI is traded near $63, Brent is near $66.80. OPEC and Russia still support the oil prices with its output cuts policy. However, the strength of the greenback is affecting the oil a lot. It is quite difficult to forecast prices because firstly, the greenback is not stable yet. This week stabilization of the dollar may be ruined next week. Secondly, the production of non-OPEC countries is growing, thus it can lead to the oversupply again. However, Saudi oil minister gave a positive forecast. He said that the oil market is rebalancing, and we can expect the continuation of inventories’ decline this year. So let’s see.
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