Crude oil prices changed direction and fell yesterday, but currently crude oil prices are traded slightly up. Today, U.S. Federal Budget Balance will be published, the U.S. retail sales and the Euro Area CPI. The G20 meeting will be held this weekend. Here’s an outlook and analysis of the crude oil market for today, October 14th:
Crude Oil Prices – October Update
On Thursday, October 13th crude oil price (WTI) slightly fell by 1.25% to $84.23/b; Brent oil price also subtracted 0.26% off its value and settled at $112.15/b; during October WTI spot oil rose by 2.88% and Brent oil price by 6.38%.
The chart below presents the prices development of WTI spot oil and Brent oil during August to October. It shows the business cycle movement of the prices during the last three months.
Premium of Brent over WTI – October Update
The premium of Brent oil over WTI spot oil sharply inclined on Thursday to $27.92. During October the premium sharply inclined by 18.56%.
On Today’s Agenda:
Euro Area CPI (September): In the last flash report for September showed an increase in CPI to 3%, which could be among the key factors that affect the recent ECB decision to leave the rate unchanged;
U.S. Retail Sales Report: during August, the gasoline stations sales rose by 0.3% in August compared with July 2011, and were 20.8% above sales in August 2010; this report could indicate the changes in U.S demand for gasoline (see here my review of the recent report).
G20 Meeting: in this meeting the financial ministers of the G20 countries will discuss the current European debt crisis and the global economic slowdown.
According to the recent EIA report, U.S. Petroleum and crude oil stockpiles slightly declined last week by 1.4 million barrels to reach 1,769.1 million barrels. U.S. Ending Stocks of Total Gasoline also sharply declined by 1.93% compared with last week’s stocks to 209.595 million barrels.
The chart below shows the petroleum stockpiles levels and the WTI crude oil price in 2010-2011.
The underground natural gas storage (Billion Cubic Feet) inclined for last week by 112 Bcf to 3,521 billion cubic feet for all lower 48 states; the current natural gas storage is 2.0% above the 5-year average.
The graph below present the natural gas storage (weekly figures) and Henry Hub natural gas prices in 2011.
Forex Market and Crude Oil Prices – October
The AUD/USD exchange rate slightly inclined on Thursday by 0.33%. Furthermore, the USD slightly depreciated against the YEN and GBP. The speculation around the European crisis continues to affect not only the forex markets but also the commodities market including crude oil. If the U.S dollar will depreciate against the risk currencies as it did during October, this trend may also push crude oil prices up.
U.S. Stock Market / Crude Oil Prices – October
The S&P500 index slightly slipped on Thursday by 0.30% to reach 1,203.66. During recent months there was a strong positive correlation between crude oil prices and S&P500 index (e.g. for WTI it was 0.539 and for Brent oil it was 0.411 in October (UTD). If the U.S stock market will make a comeback and rally, it may further affect crude oil prices to increase as well.
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 $85.34/ barrel, a $1.11 /b increase or 1.32%, as of 11:52*.
The Dated Brent spot oil price inclines by $1.08/b to $113.23/ barrel as of 12:03*.
Thus, the current premium of Brent over WTI is at $27.89/b.
Crude Oil Prices Outlook and Analysis:
Crude oil prices continue to seek direction but they do present a moderate upward trend as do other major commodities including gold and silver. I still speculate that WTI oil price will revolve around $83-$88 mark and Brent oil price will be around $108-$113 during the week.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
10:00 – Euro Area CPI and Core Monthly Inflation (September)
15:30 – Changes in U.S. Retail Sales
Tentative –U.S. Federal Budget Balance
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.