Crude oil prices sharply inclined yesterday, and currently they are traded slightly up. Today, Jean Claude Trichet will give a speech, the OPEC monthly report was published and the Canadian Housing Starts report will be published. Here’s an outlook and analysis of the crude oil market for today, October 11th:
Crude Oil Prices – October Update
On Monday, October 10th crude oil price (WTI) sharply inclined by 2.93% to $85.41/b; Brent oil price also rose by 2.61% to $108.63/b; during October WTI spot oil rose by 4.32% and Brent oil price by 3.04%.
The chart below presents 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 inclined on Monday to $23.22. During October there was a slight downward trend for this premium as it declined by 1.40%.
OPEC’s Oil Production Slipped in September -OPEC October Report
OPEC’s crude oil production slightly slipped by 77 thousand bbl/d in September to 29,896 thousand bbl/d. Libya’s oil production was still very low at 96 thousand bbl/d compared with an average of nearly 1.6 million bbl/d back in 2010.
The main reason for the slip in OPEC’s oil production was due to the drop in Saudi Arabia and Nigeria’s oil production as it fell by 122 thousand bbl/d and 162 thousand bbl/d, respectively. For the rest of the OPEC monthly report analysis see here.
U.S. Stock Market / Crude Oil Prices – October
The S&P500 index sharply rose yesterday by 3.41% to reach 1,194.89. In most of 2011 there was a strong positive correlation between crude oil prices and S&P500 index (e.g. for WTI it was 0.520 and for Brent oil it was 0.489 in October (UTD). If the U.S stock markets will continue to rally as they did in last few days, they may further affect crude oil prices to incline as well.
Forex Market and Crude Oil Prices – October
The EURO/ USD exchange rate sharply inclined on Monday by 1.97%. Furthermore, the USD depreciated against the AUD, GBP and CAD. The speculation around the European crisis and the policymakers’ promises to handle the situation affects the forex markets to shift directions nearly on a daily basis and consequently also affects the major energy commodities prices. If the U.S dollar will continue to depreciate against the above-mentioned currencies, this shift may affect crude oil prices to incline.
Current Crude Oil Prices
Major crude oil prices are currently traded slightly up in the U.S. market:
The Nymex crude oil price, short term futures (November 2011 delivery) is traded at $85.92/ barrel, a $0.51/b increase or 0.60%, as of 18:10*.
The Dated Brent spot oil price inclines by $0.68/b to $109.31/ barrel as of 18:21*.
(* GMT)
Thus, the current premium of Brent over WTI is at $23.39/b.
Crude Oil Prices Outlook and Analysis:
Crude oil prices sharply inclined yesterday over the gains in the U.S. stock markets and the depreciation of the US dollar; the current situation in the market is that these markets are neither rising nor falling resulting in slight movement for crude oil prices as well. The speculation around the progress in the U.S economy and the European debt crisis will continue to rule the markets’ directions. I speculate that WTI oil price will dwell around $83-$88 and Brent oil price around $103-$110 during the second week of October.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
Today
08:30 – ECB conference Trichet
13:15 – Canadian Housing Starts
Tentative –OPEC monthly report
[ratings]
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.