Crude oil prices started the week with sharp falls. The appreciation of USD against major currencies such as Euro, AUD and CAD might be among the factors that affected oil prices to trade down in recent days. Today, the Euro and German ZEW economic sentiment will be published, the U.S. housing starts, and Japan’s trade balance report.
Here’s a short analysis of the crude oil market for today, September 20th:
Crude oil prices –September
On Monday, September 19th crude oil price (WTI) declined by 2.57% to $85.70/b; Brent oil price also declined by 2.42% to $111.61/b; during September WTI spot oil fell by 3.50%; Brent oil price decreased by 4.18%.
The chart below shows the normalized prices (August 31st =100) of WTI spot oil and Brent oil in September.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil slightly slipped yesterday on Monday $25.91. During September, this premium declined by 3.50%.
On Today’s Agenda:
Euro and German economic sentiment: The upcoming publication will refer to the ZEW indicator of economic sentiment for Germany and Euro zone for August 2011. During August the ZEW indicator for Germany declined by 22.5 points (see here the recent report);
U.S. Housing Starts: This housing report will provide an indicator of the progress of the housing market. In the recent report regarding July 2011, US housing starts rate declined;
Japanese Trade Balance Report: The Japanese trade balance deficit for July 2011 sharply decreased by 33.6% compared with June 2011, to reach a deficit of 130.500 billion YEN (nearly $1.69 billion). Japan is among the leading importing countries of crude oil.
US Dollar / Crude Oil Prices – September Update
The Euro to US dollar exchange rate fell on Monday by 0.80%; during September the Euro/USD completed a 4.76% drop. The appreciation of US dollar against the Euro and AUD seems to affect major commodities prices including crude oil prices. If this trend will continue throughout the day, it may affect oil prices as well to trade down.
S&P500 / Crude Oil Prices – September Update
The S&P500 index fell yesterday by 0.98%; during September, the S&P500 index slipped by 1.21%. There is a strong positive correlation between crude oil prices and S&P500 index during September. If the US stock markets will rise today, it may curb some of the falls of crude oil prices throughout the day.
Australia Reserve Bank Monetary Policy – Rates were left unchanged
As expected the Reserve Bank of Australia kept the interest rates on cash unchanged at 4.75%. This decision might affect traders’ of Australian dollar currency and consequently crude oil prices.
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 (October 2011 delivery) is traded at $86.86/ barrel, a $1.16/b increase or 1.35%, as of 11:02*.
The Dated Brent spot oil price inclines by $0.75/b to $112.36/ barrel as of 11:15*.
Thus, the current premium of Brent over WTI is at $25.5/b.
Crude Oil Prices Outlook and Analysis:
Crude oil prices slipped in the past couple of business days; these falls coincide with the US stock markets slightly declining and the US dollar appreciating against major currencies. The concerns of the economic progress of the US and Europe will continue to affect traders not only in the Forex market but also commodities markets. In the near future, I still think WTI oil price will remain around $85-$90 mark and Brent oil around $110-$115, but for remainder of September crude oil prices are likely to moderately decline.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
10:00 – Euro and German ZEW economic sentiment
13:30 – U.S. Building Permits
13:30 – U.S. Housing Starts
00:50 – Report of Japanese Trade balance
13:00 – Canadian Core CPI
15:00 – U.S. existing home sales
15:30 – EIA report about Crude oil inventories
19:15 – FOMC meeting
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.