Crude oil prices changed direction along with the US stock markets and ended yesterday with light gains. The slight fall of the USD against major currencies such as Euro and CAD also provided some backwind for crude oil prices’ bounce back. Bloomberg added this morning to the speculation around a Greek debt default as it claimed that the chances of a Greece default within the next five years has risen to 98%. But the markets are currently much calmer than yesterday, as traders seeking more substantial inflation than just pure speculations around the debt crisis in Europe. Today, the US Federal Budget balance report will be published, the monthly IEA report on global oil market, the US import prices and the Australian housing starts.
Here’s a short analysis of the crude oil market for today, September 13th:
Crude oil prices –September
On Monday, September 12th crude oil price (WTI) inclined by 1.09% to $88.19/b; Brent oil price also slightly inclined by 0.23% to $112.50/b; during September WTI spot oil declined by 0.70%; Brent oil fell by 3.42%.
The chart below shows the prices of WTI spot oil and Brent oil during July up to date. The current oil prices are much lower than the price levels they were at back in July.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil continues to drop from the high levels it was at the beginning of September. The premium reached on Monday $24.31. During September, this premium fell by 12.14%.
OPEC monthly report
According to the recent monthly report of OPEC, the OPEC’s oil production slightly inclined by 76 thousand bbl/d during August to 29,920 thousand bbl/d compared with 29,844 thousand bbl/d in July. It is stated that the Libyan oil production is expected to resume in the next few days and should reach 1 million bbl/d in within six months.
On Today’s Agenda:
US Federal Budget Balance: this report will present the changes in the US federal balance for August 2011; this report indicates the government debt growth and thus may affect the USD and consequently crude oil trading.
IEA monthly report: today, the IEA monthly report will be published and will present the main changes in the expected global demand for crude oil in 2011 and 2012.
US Dollar / crude oil prices – September update
The Euro to US dollar exchange rate changed direction and rose on Monday by 0.16%; during September the exchange rate fell by 4.80%. The appreciation of US dollar against the Euro over the Greek debt crisis seems to affect major commodities prices including crude oil prices, especially WTI oil price. The US dollar also sharply appreciated during September against other major currencies including Australian dollar and Canadian dollar – two currencies that are usually strongly linked to the crude oil prices.
S&P500 / crude oil prices – September update
The S&P500 index started the week with a moderate increase of 0.70%. During September, the S&P500 index declined by 4.65%. Furthermore, in September the correlation between oil prices and S&P500 was 0.910 for Brent oil and 0.975 for WTI spot oil. If the US stock markets will continue to trade up, it may reflect in rises in crude oil prices as well.
Current crude oil prices
Major crude oil prices are currently traded with mixed trends in the European market:
The Nymex crude oil price, short term futures (October 2011 delivery) is traded at $89.29 / barrel, a $1.10/b increase or 1.25%, as of 12:57*.
The Dated Brent spot oil price declines by $0.43/b to $112.08/ barrel as of 13:07*.
(* GMT)
Thus, the current premium of Brent over WTI is at $22.79/b.
Crude oil price outlook and analysis:
The US stock market indexes bounced back on Monday, while the USD traded down against Euro and CAD. Crude oil prices followed and slightly inclined as well. It is also expected that Brent oil prices will trade down compared with WTI oil price resulting in reducing the gap between Brent oil and WTI spot oil, because it’s expected that European oil market will loosen. In the near future, I still think WTI oil price will remain around $85-$90 mark and Brent oil around $108-$112, but during the rest 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):
Today
13:30 – US import prices (m-2-m)
19:00 –US Federal Budget Balance
2:30 – Australian housing starts (Q-2-Q)
Tomorrow
10:00 – Euro Area CPI and core monthly inflation (August)
13.30 – U.S. producer price index
15:30 – Changes in US retail sales
15:30 – EIA report about Crude oil inventories
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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.