The Week In Hindsight; 04 July 2014

Brent crude declined this week as the crises in Iraq and eastern Europe once again began to recede from the headlines. While surprisingly positive US employment numbers provided a brief boost during the latter half, prices for both Brent and WTI remain close to key lower boundaries at the $110.00 and $103.00 level respectively.

Going forward, the coming week sees OPEC and the IEA announce their 2015 projections for oil supply and demand which, in all honesty, could send prices in either direction.

This because while conflicts across some OPEC nations are likely to remain an issue into next year, there is also hope on the horizon that some of these will be resolved.

For instance, Libya has for some time been edging toward a deal with rebels to reopen a number of key export terminals, while the US recently appeared to have changed tact in relation to exports of certain refined petroleum products. As a result, it is not possible to predict what will emerge from the OPEC outlook or the IEA report.

Looking further out, recent US employment data provides scope for further improvements in economic barometers over the weeks and months ahead, which could be price positive for oil benchmarks.

However, much of the price gains in both WTI and Brent over Q2 can largely be attributed to speculation following repeated crises across Ukraine, Libya and Iraq. Consequently, as (if) these continue to fade into the background oil prices would be likely to recede further.

Nevertheless, and in relation to the trading outlook; we would still expect strong support for WTI prices above the $101.00 level, while Brent we expect to attract renewed speculative interest at or around the $107.00 mark.