Oil Weekly Outlook for June 10-14

The prices of crude oil (WTI and Brent) changed direction and bounced back during last week: WTI increased by 4.41%; Brent oil, by 4.15%. As a result, the gap between the Brent oil and WTI remained virtually flat; the gap between Brent and WTI ranged between $8 and $9. Based on the latest EIA report, oil stockpiles also changed direction and fell by 1.1Mb. Moreover, imports and production also slipped during last week. Refinery inputs slightly rose.  Will oil continue to rally next week? Next week, several publications and reports may affect the oil market. These items include: U.S retail sales, China’s new loans, OPEC monthly report, IEA update, and EIA oil weekly report.

Here is a weekly outlook and analysis for the crude oil market for June 10th to June 14th:

Oil Prices – June

During last week, crude oil price (WTI) bounced back and rose by 4.41% and reached by Friday $96.03/b; moreover, Brent oil also increased by 4.15% to $104.56/b; during last month, WTI oil fell by 1.59%; Brent oil, by 1.93%.

In the chart below are the changes in WTI and Brent oil prices in the past several months (prices are normalized to January 31st). As seen in the chart herein, the oil prices have rallied in the past couple of weeks.


oil forecast Brent and WTI June 10-14 2013

Premium of Brent over WTI – June

The gap between Brent oil and WTI spot oil remained almost unchanged as it ranged between $8 and $9 per barrel. During June, the premium slightly rose by 1.31%.

Difference between Brent and WTI  June 10-14  2013

Oil Stockpiles – Slipped by 1.1Mb

The oil stockpiles decreased by 1.1 MB and reached 1,811.1 million barrels. The linear correlation between the shifts in stockpiles has slightly weakened to -0.187: this correlation suggests that oil price, assuming all things equal, will rally next week.

Oil imports to the U.S fell again by 1.1% last week. The weekly changes in oil imports have a mid-strong negative correlation (-0.306) that suggests oil prices may rise next week. Refinery inputs slightly rose last week while oil production slipped. In other words, the fall in imports and production might suggest the oil market has slightly tightened in the U.S.

The next weekly report will come out on Wednesday, June 12th and will refer to the week ending on June 7th.

OPEC Monthly Report

OPEC’s monthly report will present the main changes in crude oil and natural gas’s supply and demand worldwide; the report will also refer to the developments in the production of OPEC countries during May 2013; this news may affect oil prices (See here a summary of the recent report).

The next report will be published on Tuesday, June 11th.

IEA Monthly Report

This upcoming monthly update will show an updated (for May) outlook and analysis for the global crude oil and natural gas market for 2012 and 2013.

The next report will be published on Wednesday, June 12th.

Main Oil Related News Items for the upcoming week

Tuesday – China New Loans: This report will pertain to the recent shifts in China’s new loans. Based on the recent update, the total loans rose again for the second consecutive month; this report is another indicator for China’s economic growth;

Thursday –U.S. Retail Sales Report: in the recent report regarding April, the retail sales inched up by 0.1% from the previous month; gasoline stations sales declined by 4.7% in April compared to March 2013; this report could signal the shifts in U.S’s gasoline demand and thus may affect oil prices;

Foreign Exchange and Oil Prices Correlations – June

During last week, the EURO/USD increased again by 1.68%; conversely, the AUD/USD tumbled down again by 2.88%. The correlations among these currencies pairs (AUD /USD) and oil prices contracted. E.g. the linear correlation between the price of oil and AUD /USD was 0.30 during May/June. Nonetheless, if the U.S dollar will continue to appreciate against “risk currencies”, this could pull down oil prices.

Oil Prices Outlook and Analysis

From the supply side, the decline in production and imports in the U.S may pull up oil prices. Moreover, the latest fall in storage is another indication for a decrease in supply or a rise in demand, which could also suggest that the oil market has tighten up in the U.S. The upcoming OPEC report will show if there is any change in OPEC’s production, if the production declined, it could pressure up oil rates.  From the demand side, the upcoming reports regarding U.S retail sales, and China’s new loans might provide an update to the expected developments from demand sides.  If the reports will show growth, they could pressure up the prices of oil. The upcoming IEA monthly update will reveal of any changes in the forecast of the future oil demand. The difference between Brent and WTI oil ranged between $8 and $9 and may remain this range in the near future. Finally, if major currencies such as the EURO and Aussie will pull up against the U.S. dollar, they may positively affect oil prices. The bottom line, I guess the prices of oil will continue to rise next week.

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