WTI oil prices inclined yesterday and thus followed the modest gains in the US stock markets. The gap between Brent oil and WTI oil prices continues to close. The speculations around the Euro Area debt crisis will probably continue to affect traders of forex and commodities, but currently the market has settled down. The IEA published yesterday its revised projections on the oil market for 2011 and 2012. Today, the US PPI report will be published, the EIA crude oil stockpiles report and US retail sales review.
Here’s a short analysis of the crude oil market for today, September 14th:
Crude oil prices –September
On Tuesday, September 13th crude oil price (WTI) inclined by 2.29% to $90.21/b; Brent oil price on the other hand declined by 1.04% to $111.33/b; during September WTI spot oil rose by 1.58%; Brent oil fell by 4.42%. The chart below shows the normalized prices (August 31st =100) of WTI spot oil and Brent oil during September.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil continues to decline from the high levels it was at the beginning of September. The premium reached on Tuesday $21.12. During September, this premium fell by 23.67%.
On Today’s Agenda:
U.S. PPI: In the previous July report, the PPI increased by 0.2%, after a drop of 0.4% in June; this news could have an effect on crude oil prices;
US retail sales: in last month’s report about July, the retail sales slightly inclined by 0.5% from the previous month. This report will also show the changes during August in demand for gasoline in the US.
US Petroleum Stockpiles to be published today
The US Energy Information Administration will publish today its weekly report on the U.S. petroleum market: according to Bloomberg, U.S. oil stockpiles fell by 5.05 million barrels. In the last repot, for the week ending on September 2nd crude oil stocks reached 1,784.9 million barrels.
IEA revised down its projection on oil demand
Yesterday, the IEA – International Energy Agency published its review of the global oil market for August 2011. The worldwide oil demand projection was revised down by 0.2 mb/d to an average of 89.3 mb/d in 2011. IEA also raised its projection for Libyan oil production in Q4 2011 to 0.3 million bbl/d – a 0.2 million bbl/d increase. The expected decline in OECD demand and the projected increase in Libya’s oil production may have affected Brent oil price to trade down and perhaps even close the gap between Brent oil and WTI oil price.
S&P500 / crude oil prices – September update
The S&P500 index increased yesterday by 0.91%; during September, the S&P500 index declined by 3.78%. Furthermore, in September the correlation between oil prices and S&P500 was 0.801 for Brent oil and 0.974 for WTI spot oil. If the US stock markets will continue to trade up, it may reflect in crude oil prices rising.
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 $89.63 / barrel, a $0.58/b decrease or 0.64%, as of 11:36*.
The Dated Brent spot oil price inclines by $0.07/b to $111.39/ barrel as of 11:36*.
Thus, the current premium of Brent over WTI is at $21.76/b.
Crude oil price outlook and analysis:
The US stock market indexes inclined for two consecutive days, while the USD traded down against Euro and CAD. Crude oil prices followed and inclined, mainly WTI spot oil price. The new projections of IEA regarding a slow paced growth in demand for oil and the new projections that Libya’s oil production will start to pick up may be among the factors to have helped close the premium of Brent oil price over WT oil price. 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):
13.30 – U.S. producer price index
15:30 – Changes in US retail sales
15:30 – EIA report about Crude oil inventories
9.00 – ECB monthly bulletin
10:00 – Euro Area CPI and core monthly inflation (August)
13:30 – Department of Labor report – U.S. unemployment claims
13:30 – Report on US CPI
15.00 – Philly Fed Manufacturing Index
15:30 – EIA report about Natural gas storage
19:00 – ECB conference Trichet speaks
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.