Crude oil prices continue to zigzag on Friday as they did throughout October; currently the major energy commodities are traded up. The recent news from Canada and U.S. about the encouraging employment reports may contribute to the light optimism in the commodities market that may help crude oil prices to climb up. Today, the European industrial production report will be published, Australia’s business confidences survey and Japan’s current account. Here’s an outlook and analysis of the crude oil market for today, October 10th:
Crude Oil Prices – October Update
On Friday, October 7th crude oil price (WTI) slightly inclined by 0.47% to $82.98/b; Brent oil price nearly didn’t change as it slipped by 0.03% to $105.87/b; during October WTI spot oil rose by 1.36% and Brent oil price by 0.43%.
The chart below shows the prices development of WTI spot oil and Brent oil during October (prices are normalized to 100= 30 of September) .
Premium of Brent over WTI – October Update
The premium of Brent oil over WTI spot oil slipped on Friday to $22.89. During October there was a downward trend for this premium as it declined by 2.80%.
U.S. Natural Gas Storage Inclined by 97 Bcf
According to the recent EIA report regarding the U.S. natural gas market, the underground natural gas storage (Billion Cubic Feet) increased last week by 97 Bcf and reached 3,409 billion cubic feet for all lower 48 states; the current natural gas storage is 0.8% above the 5-year average.
During the week of September 30th, natural gas storage, imports and consumption increased while natural gas production and prices slipped.
U.S Employment Grew by 103k in September
The U.S. employment inclined in September by 103,000 according to the last U.S. labor report, which was published on Friday, October 7th by the Bureau of Labor Statistics. The rate of unemployment remained unchanged at 9.1%.
This news may have added some light optimism in the financial markets even though the increase wasn’t more than the rate needed to keep the average natural growth in population.
Canada’s Employment Also Inclined
The Canadian labor employment also showed an improvement as the employment grew by 61,000 during September after the employment remained nearly unchanged in the previous months.
Forex Market and Crude Oil Prices – October
The AUD to USD exchange rate slightly inclined on Friday by 0.23%. On the other hand, the USD appreciated against the EURO and CAD. The new of the employment situation in Canada and even more so in the U.S may have affected not only the forex markets, but also the major commodities prices. That being said, if the U.S dollar will depreciate against the above-mentioned currencies as it did during October, this shift may affect crude oil prices to incline.
U.S. Stock Market / Crude Oil Prices – October
The S&P500 index slipped on the last day of the week with a 0.82% drop on Friday to reach 1,155.46. In recent months there was a strong positive correlation between crude oil prices and S&P500 index (e.g. for WTI it was 0.665 and for Brent oil it was 0.543). If the U.S stock markets will continue to rally as they did in recent days, they may further affect crude oil prices to recover as well from the sharp falls of September.
Current Crude Oil Prices
Major crude oil prices are currently traded slightly up in the European market:
The Nymex crude oil price, short term futures (November 2011 delivery) is traded at $84.47/ barrel, a $1.49/b increase or 1.80%, as of 11:17*.
The Dated Brent spot oil price inclines by $0.90/b to $106.77/ barrel as of 11:29*.
Thus, the current premium of Brent over WTI is at $22.30/b.
Crude Oil Prices Outlook and Analysis:
Crude oil prices didn’t do much on Friday, but currently they start to pick up again. The rally in the U.S. and European stock markets may have helped crude oil prices to incline in recent days. The news of the employment situation in the U.S. and the speculation around the progress in the U.S economy may continue to affect crude oil traders. Therefore, I speculate that WTI oil price will dwell around $83-$88 and Brent oil price around $102-$109 during the second week of October.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
07:45 – French Industrial Production Report
09:00 – Italy’s Industrial Production Report
24:50 – Japan’s current account
01:30 – Australia’s business confidences survey
For further reading:
- Weekly Outlook for October 10-14
- Gold and Silver Prices Monthly Outlook for October 2011
- Natural gas prices outlook for September 2011
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.