The price of Brent crude ended the week at $79.89 after closing the previous week at $74.99. The price of WTI ended the week at $75.67 after closing the previous week at $69.26. 

Weekly Oil Price Outlook

President

John E. Paisie

This weekly report is an excerpt from our&nbsp;<a href="/Services/Short-Term-Outlook">Short-Term Outlook service</a>&nbsp;analysis, which covers a period of eight quarters and provides monthly forecasts for crude oil, natural gas, NGL, refined products, base petrochemicals and biofuels.&nbsp; Contact John Paisie (+1-832-517-7544 or&nbsp;<a href="mailto:jpaisie@stratasadvisors.com?subject=WAOP">E-mail</a>) for the detailed analysis or for more information about the Short Term Outlook.
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<img alt="Infographic" src="https://cdn.aglty.io/stratas-advisors/upload/040323-WAOP-Infographic.png" />
The price of Brent crude ended the week at $79.89 after closing the previous week at $74.99. The price of WTI ended the week at $75.67 after closing the previous week at $69.26. The increases in oil prices were supported, in part, by the financial sector seeming to act as the banking difficulties have been resolved, even though depositors continue to make significant withdrawals from banks (see Economic Section of this note for more details). Oil prices were also supported by Turkey stopping pipeline flows from northern Iraq, which affected 450,000 b/d of oil supply (see Supply Section of this note for more details). Oil prices were further boosted by the EIA reporting that crude oil inventories decreased by 7.49 million barrels during the previous week.
In last week&rsquo;s note we put forth the view that it would take some other unexpected, good news to push the price of Brent above $80.00 and WTI above $75.00 &ndash; such as a production cut by OPEC+. On Sunday, OPEC+ announced additional production cuts of 1.16 million b/d that are to start in May and last through the end of this year with the following breakdown:
<ul>
<li style="margin: 0in 0in 0in 0.5in;">Saudi Arabia &nbsp;&nbsp;&nbsp; 500,000 b/d</li>
<li style="margin: 0in 0in 0in 0.5in;">Iraq &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 211,000 b/d</li>
<li style="margin: 0in 0in 0in 0.5in;">UAE &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 144,000 b/d</li>
<li style="margin: 0in 0in 0in 0.5in;">Kuwait&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 128,000 b/d</li>
<li style="margin: 0in 0in 0in 0.5in;">Oman &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;40,000 b/d</li>
<li style="margin: 0in 0in 0in 0.5in;">Algeria &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;48,000 b/d</li>
<li style="margin: 0in 0in 8pt 0.5in;">Kazakhstan &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;78,000 b/d</li>
</ul>
While the production cuts will provide further support for oil prices, members of OPEC+ agreed to the cuts, in part, because of concerns about the outlook for global economy and&nbsp; oil demand. Each of the major economies are showing worrisome signs to differing degrees:
<ul>
<li style="margin: 0in 0in 0in 0.5in;">The final report for the University of Michigan Consumer Sentiment Index for March fell to 62.0 from 67.0 in February &ndash; and is the first monthly decrease since October 2022. From a historical perspective, the March reading is 27% below the average reading (with the survey beginning in 1978). The reading is also lower than typical at the beginning of a recession. The 10-year treasury ended last week at 3.518%. In comparison the 10 year was at 4.073% at the beginning of March and 4.226% on October 19, 2022. The yield curve remains inverted with 2-year treasury at 4.102%, which is another sign of the economy being on the verge of a recession.</li>
<li style="margin: 0in 0in 0in 0.5in;">The Eurozone had some mixed news with respect to inflation with annualized inflation decreasing from 8.5% in February to 6.9% in March. The decrease stems mainly, however, from a decrease in energy prices, which decreased by 0.9% in March after increasing by 13.7% in February. Core inflation, which excludes energy and food, reached an all-time high of 5.7%.&nbsp;</li>
<li style="margin: 0in 0in 0in 0.5in;">The latest data from China indicates that even with the removal of the COVID-related restrictions, economic growth in China remained moderate during the first two months of the year:</li>
</ul>
<ul>
<li style="margin: 0in 0in 0in 0.75in;">Retail sales increased by 3.5%, but sales associated with automobiles and other high-price goods decreased</li>
<li style="margin: 0in 0in 0in 0.75in;">Industrial production increased by only 2.4%</li>
<li style="margin: 0in 0in 0in 0.75in;">Real estate investments decreased by 5.7% after decreasing by 10% in 2022</li>
<li style="margin: 0in 0in 8pt 0.75in;">Investments in Fixed asset investment, however, increased by 5.5%</li>
</ul>
As such, for the upcoming week, we think oil prices will move up further, but the price of Brent will hit resistance at $86.00 and WTI will hit resistance at $82.00.
For a complete forecast of refined products and prices, please refer to our <a href="~/services/services?ContentID=190" target="_blank" rel="noopener">Short-term Outlook</a>

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