Crude oil prices declined in the past three business day, but currently they are traded down. The speculation around the European debt crisis and the slowdown in Asia and US may continue to affect traders to keep crude oil prices lower than their level in previous months. Today, the U.S. New Home Sales will be published.
Here’s a short analysis of the crude oil market for today, September 26th:
Crude Oil Prices –September
On Friday, September 23rd crude oil price (WTI) declined by 0.85% to $79.58/b; Brent oil price also slipped by 0.86% to $106.64/b; during September WTI spot oil fell by 10.39%; Brent oil price decreased by 8.45%.
The chart below shows the prices development of WTI spot oil and Brent oil (normalized prices 31st of August=100) during September.
Premium of Brent over WTI – September Update
The premium of Brent oil over WTI spot oil slightly declined on Friday to $27.06. During September, this premium declined by 2.2%.
On Today’s Agenda:
U.S. New Home Sales: in the recent report (July 2011), the sales of new homes slightly decreased by 0.7% compared with the number of new homes sold in June 2011; if this drop will continue, it may only further indicate a slowdown in the US housing markets and may affect commodities market as well via the changes in the US demand;
Forex Market and Crude Oil Prices – September Update
The Euro to US dollar exchange rate slightly inclined on Friday by 0.27%; during September the Euro/USD completed a 6.04% decrease. The depreciation of US dollar against the Euro, CAD AUD may have curbed the falls of crude oil prices on Friday. If USD will depreciate today, it may also affect crude oil prices to trade slightly up.
U.S. Stock Market / Crude Oil Prices – September Update
The S&P500 index slightly inclined on Friday by 0.61%; during September, the S&P500 index fell by 6.77%. During September, there was a strong positive correlation between crude oil prices and S&P500 index (e.g. for WTI it was 0.642 and for Brent oil it was 0.559). If the US stock markets will bounce back and recover today, it may further affect crude oil prices to incline as well throughout the day.
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 $78.44/ barrel, a $1.41/b decrease or 1.77%, as of 17:17*.
The Dated Brent spot oil price declines by $0.88/b to $105.76/ barrel as of 17:29*.
Thus, the current premium of Brent over WTI is at $27.32/b.
Crude Oil Prices Outlook and Analysis:
Crude oil prices sharply during last week mainly during the second part of the week. Currently crude oil prices are making a slow recovery. The financial markets didn’t react well to the Fed’s stimulus plan; the growing concerns of a debt crisis in Europe will continue to hover over the forex and commodities markets. Therefore, major commodities prices including crude oil prices are likely to remain lower than their rate at the beginning of the month. I speculate that WTI oil price will continue to trade around the $80-$85 mark and Brent oil price around $105-$110 throughout the rest of September.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
15:00 – U.S. New Home Sales
09:00 – Monetary Developments in the Euro Area
15:00 – US Consumer Confidence
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.