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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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The Next Major Catalyst For Oil Prices

Rig

U.S. West Texas Intermediate crude oil is trading lower early Friday, putting the market in a position to close lower for the week. There is a price divergence between WTI and Brent crude oil that could raise concerns with some traders, but can be explained easily so I don’t think it is a major issue.

While WTI is headed lower for the week, Brent crude oil is in a position to close higher for a third week in row. Supply disruptions in Iran will have a stronger bullish influence on Brent prices, while rising U.S. inventories and production has a bigger impact on WTI prices.

Concerns that the U.S. may reimpose sanctions on Iran helped underpin the markets this week as this represents a threat to supply. Gains were likely limited by this week’s higher than expected U.S. crude oil and gasoline inventories as well as rising U.S. production.

The underlying narrative remains the same. Prices are being supported by continued adherence to the OPEC-led production cuts, increased demand from Asia, possible supply disruptions in Iran and turmoil in Venezuela.

Prices will be pressured by rising U.S. production as shale drillers try to take advantage of higher prices by ramping up activity.

The price action was choppy this week with both WTI and Brent posting two-sided moves. Crude oil traded higher on Monday and Tuesday with Brent trading through last week’s high. However, a bigger than expected jump in U.S. inventories sent crude oil futures…

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