Fundamental weekly forecast of oil prices

The Brent crude oil futures are expected to open sharply on Sunday after a string of drone attacks on a Saudi oilfield and processing facility. Drone strikes are thought to have disrupted half of the country's production capacity, leading to a forecast opening of $ 5 to $ 10 in the futures market.

Last week, Brent crude oil in December stood at $ 59.25, down $ 1.32 or -2.23% and WTI crude oil in November at $ 54.80, down $ 1.63 or -2.89%.

This news will bring back the focus on supply as the majority of bearish action last week has been fueled by demand concerns. Last week, oil prices were worried by concerns over weak demand, which could lead to an overabundance of supply. This story surpassed the pace of progress in the US-China trade dispute as the world's two largest economies were preparing for new negotiations with conciliation before discussions.

This week, traders will try to determine the impact of the Saudi outburst on the supply. This will determine the realistic price increase, although we expect aggressive speculators to initially drive markets beyond this point.

Last week, the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) declared that oil markets could generate a surplus next year, despite the pact between OPEC and its allies to limit supplies. This program was largely offset by growth in US production.

At the end of the week, traders said that to avoid lower prices and a massive build up of stocks, OPEC and its allies should proceed with further voluntary production cuts. Talk about paying attention to what you want.

Weekly forecasts

Currently, traders expect a price increase of $ 5 to $ 10 at the early opening of the session Sunday. According to Reuters, these figures are based on industry sources that have reported having affected about 5 to 6 million barrels per day (bpd) or 5-6% of the global supply.

However, keep in mind that Saudi Arabia has not yet commented on the extent of the damage to its oil production, although the president and chief executive officer of Saudi Aramco, Amin Nasser, said: "Work is underway to restore production and an update of progress will be provided in about 48 hours. "

Keep this in mind because of the increased risks associated with the continuation of the market due to potentially bullish securities. Until now, we expect a pick up, nothing indicates for the moment that this will become a long-term uptrend.

The IEA further added Saturday that she was "closely monitoring" the situation after the drone attacks, adding that the markets are "well stocked with commercial stocks".

This suggests that we will likely see a short-term price adjustment. In addition, other members of OPEC and its allies could temporarily increase their production to make up for the deficit. Otherwise, the United States would be "the only real holder of the global supply cushion because of its ability to increase production or relax sanctions against other major oil producers," according to Reuters.