The price of Brent crude ended the week at $74.60 after closing the previous week at $71.05. The price of WTI ended the week at $71.22 after closing the previous week at $66.95. The price of DME Oman crude ended the week at $73.50 after closing the previous week at $70.24. 

Weekly Oil Price Outlook

President

John E. Paisie

This weekly report is an excerpt from our&nbsp;<a href="~/services/services?ContentID=190" target="_self">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) for the detailed analysis or for more information about the Short Term Outlook.
<hr />
<div style="margin: 0px; padding: 0px; border: 0px;">
<img src="https://cdn.aglty.io/stratas-advisors/upload/112524-waop_20241125095113.png?w=800" alt="chart" />
The price of Brent crude ended the week at $74.60 after closing the previous week at $71.05. The price of WTI ended the week at $71.22 after closing the previous week at $66.95. The price of DME Oman crude ended the week at $73.50 after closing the previous week at $70.24.
As we pointed out last week there are some developments that will provide upward support for oil prices, and developments of last week further boosted this support.
<ul>
<li>Geopolitics: The conflict involving Russia and Ukraine and the conflict involving Israel and Iran (and proxies) are showing signs of further escalation. In response to President Biden authorizing Ukraine to use US-made long-range ATACMS missiles to attack Russia, Russia changed its doctrine pertaining to the use of nuclear weapons. The change allows Russia to utilize nuclear weapons in response to conventional attacks by any nation that is supported by a nuclear power. Additionally, Russia launched a ballistic missile into central Ukraine that carried six warheads. The missile has a range of 3,000 miles (5,000 km), can carry nuclear warheads, and represents a challenge to Ukraine&rsquo;s air defense. With Donald Trump returning to the presidency, it is likely that the US will put more pressure on Iran, including enforcement of sanctions on Iran&rsquo;s oil exports, and Israel is likely to have the opportunity to take a more aggressive stance with respect to Iran. The risk is that this approach will lead to China and Russia aligning with Iran.</li>
<li>Oil Supply: We are expecting that OPEC+ will continue to delay the unwinding of supply cuts at its next meeting, which is scheduled for December 1. Given the current level of oil prices and the supply/demand dynamics, there is an incentive and rationale for OPEC+ to delay any change to its supply until the beginning of Q2 of 2025. The delay will also provide time for OPEC+ to learn more about the intentions of the reelected President Trump, who has discussed policies that are positive and negative for oil prices. From a positive perspective, Trump has indicated that he will place sanctions on the Iranian oil sector and Venezuelan oil sector &ndash; and reduce support for alternatives. From a negative perspective, he is supporting an increase in domestic oil production.</li>
</ul>
The most significant risk to oil prices remains the extent of oil demand growth. While the US economy continues to show signs of strength, the economies of the eurozone and China continue to struggle. Earlier this month, the European Commission reduced its forecast slightly for EU economic growth in 2025 from 1.4% to 1.3% and projected that the EU will grow by only 0.8% in 2024. Last week, the congressionally chartered U.S.-China Economic and Security Review Commission recommended that the US remove the &ldquo;most favored nation&rdquo; status for China. The removal of the status would result in all of China&rsquo;s exports to the US ($427 billion in 2023) being exposed to tariffs ranging from 35% to 100%. Trump has indicated that he will impose tariffs of 60% on Chinese imports. Additionally, and even so in the US, the manufacturing sector is struggling and contracting in all the major economies.
For the upcoming week, a key resistance level for the price of Brent crude is $76.00. If the price of Brent crude can break above this level, we could see Brent crude moving towards $80.00. Otherwise, the price of Brent crude is likely to drift downwards to $72.00.
For a complete forecast of crude oil and refined products and other energy-related fundamentals and prices, please refer to our <a href="~/services/services?ContentID=190" target="_blank" rel="noopener">Short-term Outlook</a>.
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Push and Pull

<img src="https://cdn.aglty.io/stratas-advisors/upload/112524-waop_20241125095113.png?w=800" alt="chart" />
The price of Brent crude ended the week at $74.60 after closing the previous week at $71.05. The price of WTI ended the week at $71.22 after closing the previous week at $66.95. The price of DME Oman crude ended the week at $73.50 after closing the previous week at $70.24.
As we pointed out last week there are some developments that will provide upward support for oil prices, and developments of last week further boosted this support.
<ul>
<li>Geopolitics: The conflict involving Russia and Ukraine and the conflict involving Israel and Iran (and proxies) are showing signs of further escalation. In response to President Biden authorizing Ukraine to use US-made long-range ATACMS missiles to attack Russia, Russia changed its doctrine pertaining to the use of nuclear weapons. The change allows Russia to utilize nuclear weapons in response to conventional attacks by any nation that is supported by a nuclear power. Additionally, Russia launched a ballistic missile into central Ukraine that carried six warheads. The missile has a range of 3,000 miles (5,000 km), can carry nuclear warheads, and represents a challenge to Ukraine&rsquo;s air defense. With Donald Trump returning to the presidency, it is likely that the US will put more pressure on Iran, including enforcement of sanctions on Iran&rsquo;s oil exports, and Israel is likely to have the opportunity to take a more aggressive stance with respect to Iran. The risk is that this approach will lead to China and Russia aligning with Iran.</li>
<li>Oil Supply: We are expecting that OPEC+ will continue to delay the unwinding of supply cuts at its next meeting, which is scheduled for December 1. Given the current level of oil prices and the supply/demand dynamics, there is an incentive and rationale for OPEC+ to delay any change to its supply until the beginning of Q2 of 2025. The delay will also provide time for OPEC+ to learn more about the intentions of the reelected President Trump, who has discussed policies that are positive and negative for oil prices. From a positive perspective, Trump has indicated that he will place sanctions on the Iranian oil sector and Venezuelan oil sector &ndash; and reduce support for alternatives. From a negative perspective, he is supporting an increase in domestic oil production.</li>
</ul>
The most significant risk to oil prices remains the extent of oil demand growth. While the US economy continues to show signs of strength, the economies of the eurozone and China continue to struggle. Earlier this month, the European Commission reduced its forecast slightly for EU economic growth in 2025 from 1.4% to 1.3% and projected that the EU will grow by only 0.8% in 2024. Last week, the congressionally chartered U.S.-China Economic and Security Review Commission recommended that the US remove the &ldquo;most favored nation&rdquo; status for China. The removal of the status would result in all of China&rsquo;s exports to the US ($427 billion in 2023) being exposed to tariffs ranging from 35% to 100%. Trump has indicated that he will impose tariffs of 60% on Chinese imports. Additionally, and even so in the US, the manufacturing sector is struggling and contracting in all the major economies.
For the upcoming week, a key resistance level for the price of Brent crude is $76.00. If the price of Brent crude can break above this level, we could see Brent crude moving towards $80.00. Otherwise, the price of Brent crude is likely to drift downwards to $72.00.
For a complete forecast of crude oil and refined products and other energy-related fundamentals and prices, please refer to our <a href="~/account/subscriptions/short-term-outlook" target="_blank" rel="noopener">Short-term Outlook</a>.
<h2>Global Supply &ndash; Positive&nbsp;&nbsp;</h2>
We are expecting that OPEC+ will continue to delay the unwinding of supply cuts at its next meeting which is scheduled for December 1. Given the current level of oil prices and the supply/demand dynamics, there is an incentive and rationale for OPEC+ to delay any change to its supply until the beginning of Q2 of 2025. The delay will also provide time for OPEC+ to learn more about the intentions of the reelected President Trump, who has discussed policies that are positive and negative for oil prices. From a positive perspective, Trump has indicated that he will place sanctions on the Iranian oil sector and Venezuelan oil sector &ndash; and reduce support for alternatives. From a negative perspective, he is supporting an increase in domestic oil production.
The latest EIA report showed that US oil production decreased to 13.2 million b/d from 13.4 million b/d the previous week. Last week, the number of operating oil rigs in the US increased by 1 and now stands at 479, which compares to the pre-COVID level of 683 that occurred during the week of March 13, 2020. One year ago, the US oil rig count was 500. The number of oil rigs in Canada decreased by 4 and now stands at 133. One year ago, the Canadian oil rig count was 124. We are currently forecasting that US oil production will average 13.23 million b/d in 2024, which is only an increase of 220,000 b/d&nbsp; in comparison to 2023. With their current CAPEX and drilling programs, US producers have found it difficult to increase supply to the extent of last year when supply increased by 1.02 million b/d.
The EIA report also showed that US crude inventories increased by 0.545 million barrels. Crude inventories are less than the level of the previous year (430 million barrels vs. 448 million barrels) and less than the inventory levels in 2019 (430 million barrels vs. 450 million barrels). The inventory level at Cushing decreased to 25.05 million barrels, which compares to 25.87 million barrels in the previous year. The SPR inventories increased to 389.19 million barrels from 387.79 million barrels. The SPR reached its lowest level (347.16 million barrels) during the week of June 30, 2023. During the week of August 20, 2020, the SPR was at 648.17 million barrels.
For the upcoming week, we expect that this factor will be a positive factor for oil prices.
[shoojuview id="yrrpvsxvxpfgkpqtaher"]
<h2>Geopolitics &ndash; Positive</h2>
The following is a summary of recent developments pertaining to the major economies.
Russia-Ukraine 
In response to President Biden authorizing Ukraine to use US-made long-range ATACMS missiles to attack Russia, Russia changed its doctrine pertaining to the use of nuclear weapons. The change allows Russia to utilize nuclear weapons in response to conventional attacks by any nation that is supported by a nuclear power. Additionally, Russia launched a ballistic missile into central Ukraine that carried six warheads. The missile has a range of 3,000 miles (5,000 km), can carry nuclear warheads, and represents a challenge to Ukraine&rsquo;s air defense.
The introduction of the ballistic missile highlights the main issue facing the US and allies with respect to the Russia-Ukraine conflict &ndash; Russia still has the capability to meet escalations by the US and allies with escalations of its own &ndash; including the use of tactical nuclear weapons. The US and allies are already facing the very real possibility of the need to provide military personnel to fight along the front lines given the current military position of Ukraine and the struggle to find soldiers for the battlefield. While some &ldquo;experts&rdquo; keep stating that Ukraine must not lose &ndash; none put forth a rational strategy for this outcome. Providing more weapon systems to Ukraine does not resolve the lack of soldiers nor mitigate the threat of further escalation &ndash; which is likely, especially since Russia views the conflict as being of the utmost geostrategic importance.
The above dynamics along with the election of Donald Trump, points to a greater likelihood that a negotiated settlement will occur. While Trump will face some resistance from his own party and others, it is our view that he is inclined to push for a negotiated settlement at the beginning of his administration when he will have significant political power.
Israel &ndash; Iran 
The conflict continues with Hezbollah on Sunday launching around 250 rockets into Israel with some of the rockets reaching Tel Aviv.
Additionally, a senior advisor to Iran&rsquo;s Supreme Leader Ali Khamenei, stated that Iran will respond to Israel&rsquo;s attacks on Iranian military targets that took place on October 26 with the aim to restore deterrence.
With Donald Trump returning to the presidency, it is likely that the US will put more pressure on Iran, including enforcement of sanctions on Iran&rsquo;s oil exports, and Israel is likely to have the opportunity to take a more aggressive stance with respect to Iran. The risk is that this approach will lead to China and Russia aligning with Iran.
For the upcoming week, we expect this variable to be a positive factor for oil prices.
<h2>Economy &ndash; Negative</h2>
The following is a summary of recent developments pertaining to the major economies.
US
The US Composite PMI (manufacturing sector and service sector) from S&amp;P Global increased to 55.3 from 54.1 in October and is now at the highest level since April 2022.
<ul>
<li>The PMI for the service sector increased to 57.0 from 55.0 in October</li>
<li>The PMI for the manufacturing sector increased to 48.8 from 48.5</li>
</ul>
The GDPNow model from the Federal Reserve Bank of Atlanta is indicating that real GDP growth during Q4 will be 2.6%.
The latest inflation data provided by the Bureau of Labor Statistics shows that the inflation rate increased in October. The Consumer Price Index (CPI) increased by 0.2% from the previous month and 2.6% on an annual basis, which compares to 2.4% in September. The core CPI, which excludes food and energy, increased by 0.3% from the previous month and 3.3% on an annual basis and remained unchanged from September. A major source of inflation stems from shelter prices, which increased by 0.4% in September and 4.9% on an annual basis. During October, price inflation outpaces wage increases with wages increasing by only 0.1% in October and by 1.4% on an annual basis.
Despite the lingering inflation, it appears that the Federal Reserve will move forward with another 25 basis point cut in December. The market is currently expecting additional rates cuts of 0.75% during 2025.
The US Dollar Index increased significantly last week, finishing the week at 107.50 from the previous week of 106.67. The US dollar Index is now at its highest level since early November of 2022. One reason for the increase in the US Dollar Index is the weakness in the euro, which ended the week at 1.0427 USD. On August 18, the euro was 1.1194 USD.
The US 10-Year Treasury ended the week at 4.417%, decreasing from 4.448% of the previous week.&nbsp;&nbsp;
Europe
In contrast to the US, the composite PMI for the eurozone decreased to 48.1, which is the lowest level since February of this year.
<ul>
<li>The PMI for the service sector decreased to 49.2 from 51.6 in October and is the first reading below 50 (indicates contraction) since January of this year</li>
<li>A significant reason for the decrease is the service PMI for France decreased to 45.7 in France</li>
<li>The PMI for the manufacturing sector decreased to 45.2</li>
</ul>
Earlier this month, the European Commission reduced its forecast slightly for EU economic growth in 2025 from 1.4% to 1.3% and projected that the EU will grow by 0.8% in 2024. Additionally, the European Commission forecasted that inflation for 2024 will be 2.4% and 2.1% in 2025.
The European Commission also highlighted concerns that economic growth in Europe and the current forecast has downside risks stemming from the possibility of increased tariffs imposed by the incoming US presidential administration. Especially vulnerable is the European manufacturing sector, which has contracted by 6% since January 2022, in part, from the higher energy costs associated with the beginning of the Russia-Ukraine conflict.
The downturn in the EU economy adds further support to our expectations that the ECB will cut rates at its December meeting by 50 basis points.
China
Last week, the congressionally chartered U.S.-China Economic and Security Review Commission recommended that the US remove the &ldquo;most favored nation&rdquo; status for China. The removal of the status would result in all of China&rsquo;s exports to the US ($427 billion in 2023) being exposed to tariffs ranging from 35% to 100%. Trump has indicated that he will impose tariffs of 60% on Chinese imports. &nbsp;
While China remains a major exporter to the US, it is no longer the largest exporter to the US, which in 2023 became Mexico, in part because of the free trade agreement with the US. While China is the leading global exporter (with 14% of total global exports) China has been shifting its exports away from the largest western economies, which has decreased to less than 30% of China&rsquo;s exports. Consistent with the shift in China&rsquo;s exports are reports that China is seeking to improve relationships with India. In 2023, China became the largest exporter to India, surpassing the US.
The changing trade relationships are part of the ongoing shift in the economic and geopolitical relationships that will shape future global developments.
For the upcoming week, we expect this variable to be a negative factor for oil prices.
[shoojuview id="thpqqlagjpuwrbocltoa"]&nbsp; &nbsp;&nbsp;
<h2>Oil Demand &ndash; Neutral</h2>
The latest weekly report from EIA shows the following change in demand for transport fuels:
<ul>
<li>Gasoline demand in the US decreased to 8.42 million b/d from the previous week of 9.38 million b/d. In comparison with 2019, gasoline demand is running 4.41% less during the last four weeks, but 0.48% more in comparison with 2023.</li>
<li>Diesel demand in the US decreased to 3.78 million b/d from the previous week of 4.10 million b/d. In comparison with 2019, diesel demand is running 12.95% less during the last four weeks and 6.42% less in comparison with 2023.</li>
<li>Jet fuel demand decreased to 1.60 million b/d from the previous week of 1.74 million b/d. In comparison with 2019, jet fuel demand is running 4.26% less during the last four weeks and 1.29% less than in 2023.</li>
</ul>
Earlier this month, the IEA increased its forecast for oil demand growth slightly from 0.900 million b/d to 0.920 million b/d. Previously, the research arm of OPEC has reduced its global oil demand growth for 2024 once more from 2.03 million b/d to 1.93 million b/d. Earlier this year, OPEC was forecasting 2.25 million b/d of oil demand growth. China represents the main reason for the reduced forecasts with OPEC reducing China&rsquo;s demand growth from 650,000 b/d to 580,000 b/d. The IEA stated in its November report that China&rsquo;s demand in Q3 averaged 270,000 b/d in comparison to the previous year and has been decreasing for six consecutive months.
For the upcoming week, we expect this variable to be a neutral factor for oil prices.
<h2>Refining Sector &ndash; Neutral</h2>
Refining margins in the US decreased from the previous week with crude prices increasing more than product prices.
The latest EIA report shows that crude inputs decreased to 16.23 million b/d from 16.51 million b/d of the previous week. Refining utilization decreased to 90.2% from 91.4%. The utilization rate for the East Coast increased to 82.3%. The utilization rate for the US Gulf Coast decreased to 92.3%.
With respect to product inventories in the US:
<ul>
<li>Gasoline inventories increased by 2.05 million barrels</li>
<li>Diesel inventories decreased by 0.114 million barrels</li>
<li>Jet fuel inventories increased by 0.655 million barrels</li>
</ul>
Inventories of gasoline are below the typical level for this time of year when compared to the previous five years (excluding 2020 when inventories were unusually high because of COVID-19). Diesel inventories are slightly above the typical level for this time of year. Inventories of jet fuel are above the typical level for this time of year.
From a global perspective, OECD inventories of refined products have recently seen a significant drawdown and are at their lowest level since January of this year.
Refining margins in Europe decreased with product prices increasing less than crude oil prices. Likewise, refining margins in Asia decreased with product prices increasing less than crude oil prices.
For the upcoming week, we expect this variable will be a neutral factor for oil prices.
<h2>Oil Trader Sentiment &ndash; Negative&nbsp;</h2>
Last week, traders of WTI decreased their net long positions by slightly reducing their long positions while adding to their short positions. After last week&rsquo;s decrease, net long positions are 59% below the level seen on July 16 of this year, which was the highest level of the year, and when the price of WTI was $80.76.
Traders of Brent crude increased their net long positions by increasing their long positions while reducing their short positions.
For the upcoming week, we expect this variable will be a negative factor for oil prices.

This weekly report is an excerpt from our&nbsp;<a href="~/services?ContentID=190" target="_self">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) for the detailed analysis or for more information about the Short Term Outlook.
<hr />
<div style="margin: 0px; padding: 0px; border: 0px;">
<img src="https://cdn.aglty.io/stratas-advisors/upload/112524-waop_20241125095113.png?w=800" alt="chart" />
The price of Brent crude ended the week at $74.60 after closing the previous week at $71.05. The price of WTI ended the week at $71.22 after closing the previous week at $66.95. The price of DME Oman crude ended the week at $73.50 after closing the previous week at $70.24.
As we pointed out last week there are some developments that will provide upward support for oil prices, and developments of last week further boosted this support.
<ul>
<li>Geopolitics: The conflict involving Russia and Ukraine and the conflict involving Israel and Iran (and proxies) are showing signs of further escalation. In response to President Biden authorizing Ukraine to use US-made long-range ATACMS missiles to attack Russia, Russia changed its doctrine pertaining to the use of nuclear weapons. The change allows Russia to utilize nuclear weapons in response to conventional attacks by any nation that is supported by a nuclear power. Additionally, Russia launched a ballistic missile into central Ukraine that carried six warheads. The missile has a range of 3,000 miles (5,000 km), can carry nuclear warheads, and represents a challenge to Ukraine&rsquo;s air defense. With Donald Trump returning to the presidency, it is likely that the US will put more pressure on Iran, including enforcement of sanctions on Iran&rsquo;s oil exports, and Israel is likely to have the opportunity to take a more aggressive stance with respect to Iran. The risk is that this approach will lead to China and Russia aligning with Iran.</li>
<li>Oil Supply: We are expecting that OPEC+ will continue to delay the unwinding of supply cuts at its next meeting, which is scheduled for December 1. Given the current level of oil prices and the supply/demand dynamics, there is an incentive and rationale for OPEC+ to delay any change to its supply until the beginning of Q2 of 2025. The delay will also provide time for OPEC+ to learn more about the intentions of the reelected President Trump, who has discussed policies that are positive and negative for oil prices. From a positive perspective, Trump has indicated that he will place sanctions on the Iranian oil sector and Venezuelan oil sector &ndash; and reduce support for alternatives. From a negative perspective, he is supporting an increase in domestic oil production.</li>
</ul>
The most significant risk to oil prices remains the extent of oil demand growth. While the US economy continues to show signs of strength, the economies of the eurozone and China continue to struggle. Earlier this month, the European Commission reduced its forecast slightly for EU economic growth in 2025 from 1.4% to 1.3% and projected that the EU will grow by only 0.8% in 2024. Last week, the congressionally chartered U.S.-China Economic and Security Review Commission recommended that the US remove the &ldquo;most favored nation&rdquo; status for China. The removal of the status would result in all of China&rsquo;s exports to the US ($427 billion in 2023) being exposed to tariffs ranging from 35% to 100%. Trump has indicated that he will impose tariffs of 60% on Chinese imports. Additionally, and even so in the US, the manufacturing sector is struggling and contracting in all the major economies.
For the upcoming week, a key resistance level for the price of Brent crude is $76.00. If the price of Brent crude can break above this level, we could see Brent crude moving towards $80.00. Otherwise, the price of Brent crude is likely to drift downwards to $72.00.
For a complete forecast of crude oil and refined products and other energy-related fundamentals and prices, please refer to our <a href="~/account/subscriptions/short-term-outlook" target="_blank" rel="noopener">Short-term Outlook</a>.
</div>

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