Oil prices’ erratic behavior – Weekly recap 14-18 February

The instability in the Middle East continues to rise as Iran sent to Warships to Syrian and just passed the Suez Canal. Some already speculate that this news and the impediments in transmitting natural gas to Israel are signals for the cool down in the relation between Egypt and Israel. Furthermore, there are still uprise in Yemen, Libya, Tunisia and Bahrain. All these news items contribute to the rise in the uncertainty level in the Middle East. Nevertheless, it’s very premature to determine if these news items have any substantial effects on commodities’ prices such as crude oil price.

Here is a weekly recap for February 14th to 18th on the main changes in crude oil price, recapping the highlights on petroleum stocks, production and consumption in the US and the news from the Middle East:

Crude oil price

table crude oil price - 14-18  February* This figure is calculated based on the percent change from the price at the beginning of the week compare to the price at the end of the week

After the fall of President Mubarak, there are several other countries that took the lead in trying to get rid of their dictators: the countries currently on the news include, among others, Yemen and Libya. There are also protests in Bahrain calling for a change.

A related news item to the Middle East is the Iranian two warships that are reported to have recently passed the Suez Canal en route to Syria. There ships could pose a threat to Israel and drive up the uncertainty in the Middle East along with the tension in the entire region.

Up to now, there is little evidence to support of any long term effect of these news items on crude oil prices. Nevertheless, the only thing worth mentioning is that the erratic behavior of oil prices in the passing week as presented herein.

Let’s check how crude oil prices did last week:

Crude oil price (WTI spot) weekly average of 84.87$/b fell by 0.87% compare to last week’s average price of 86.23$/b. On average, crude oil price (WTI) daily change was 0.43%, however its price inclined by 3.04% from beginning to end of the week.

The WTI crude oil price ranged between 86.36 $/b and 83.13 $/b – a range of 3.23$/b, which is higher than last week’s range.

NYMEX Futures Price (future for March) much like WTI spot price, rose by 1.6% from beginning to end of the week as it settled on 86.2 $/ on Friday .

These figures show that WTI (spot and future) started off the week lower than last week, only to finish strong at the end of the week.

Europe Brent spot price, on the other hand, declined by 0.9% from beginning to end of the week, and its average weekly price was 102.8$/b which is 2.9% above last week’s average.

The gap between the Brent and WTI spot prices was on Friday 16$/b – the lowest gap all week. As the upcoming week will progress, we will see if there is a trend in closing the gap between the two spot prices.

Crude oil charts

The following charts show the changes of WTI spot price, NYMEX Futures Prices (future for February) and Europe Brent spot price:

Crude oil charts - 14-18 February

The chart above shows that all in all Brent price had a shallow downward trend while WTI had a shallow upward trend, however this is only part of the picture.

The final graph shows crude oil price (WTI spot, WTI future, Brent spot) daily percent change for this passing week:

Crude oil charts - percent change 14-18  FebruaryThe graph above shows the erratic behavior I have referred to before, in which you can see many shifts throughout the week in the prices of oil.

Petroleum Stocks –highlights:

In my recent review on last week’s EIA report petroleum stocks, consumption and production in the US, oil stocks, after rising for five weeks straight, have declined last week by 0.5%, a decrease of nearly 8.4 million barrels of crude oil to reach 1,796 million barrels.

Despite the fall in total crude oil stocks, the Stocks of Total Gasoline moderately inclined by 0.1% a 0.2 million barrels rise – reaching 241 million barrels.

The average US productions (million of barrels a day) was 5.524 on a four week average, higher than last week by 1.9%, and also higher by 1.5% compare to the average production at the same time last year;

Crude oil imports has decreased for the week of February 11th (4 week average) by 2.02% compare to the week of 4/2/2011, but declined by 7.2% compare to last year’s same time.

For the complete petroleum stocks, consumption and production review see here.

For further reading (in this site):

Examining the Fed’s policy and its potential effect on oil prices

Previous issues of weekly report:

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