Crude oil prices ended the week falling, resulting in WTI oil price losing only 0.96% of it value during September (up to date) and Brent oil shed 1.8% of its value. The recent appreciation of USD on Friday may have assisted crude oil prices to lose ground. Currently, Euro/USD is falling, perhaps over the rising concerns over a Greek debt default. This might continue to affect the direction of crude oil prices throughout the day. Today, the minutes of the last Monetary Policy meeting of Australia’s Central bank will be published.
Here’s a short analysis of the crude oil market for today, September 19th:
Crude oil prices –September
On Friday, September 16th crude oil price (WTI) declined by 1.61% to $87.96/b; Brent oil price also declined by 0.15% to $114.38/b; during September WTI spot oil slightly fell by 0.96%; Brent oil fell by 1.80%.
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 changed direction from a downward trend in recent weeks to a sharp increase in the past couple of days. The premium reached on Friday $26.42. During September, this premium fell by 4.52%.
On Today’s Agenda:
Reserve Bank of Australia Monetary Policy meeting: The minutes of the monetary policy meeting of the reserve bank of Australia will be published, regarding the recent decision of the Bank’s basic interest rate; this decision might also affect traders’ of Australian dollar currency and consequently crude oil prices.
US Dollar / crude oil prices – September update
The Euro to US dollar exchange rate changed direction and fell on Friday by 0.58%; during September the Euro/USD fell by 3.99%. The appreciation of US dollar against the Euro and AUD seems to affect major commodities prices including crude oil prices. Currently the USD is traded up against EURO and AUD. 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 increased on Friday by 0.57%; in past week the S&P500 index gained back 5.35% to its value; during September, the S&P500 index slightly slipped by 0.24%. There is a strong positive correlation between crude oil prices and S&P500 index of 0.556 with WTI and 0.405 with Brent oil. If the US stock markets will continue to rise, it may curb some of the falls of crude oil prices throughout the day.
Current crude oil prices
Major crude oil prices are currently traded down in the European market:
The Nymex crude oil price, short term futures (October 2011 delivery) is traded at $86.97 / barrel, a $0.99/b decrease or 1.13%, as of 11:34*.
The Dated Brent spot oil price declines by $0.33/b to $114.05/ barrel as of 11:34*.
Thus, the current premium of Brent over WTI is at $27.08/b.
Crude oil price outlook and analysis:
Crude oil prices didn’t do much during the month, but they are likely to trade down and decline throughout the rest of September, over the concerns of the economic progress of the US and Europe. Bloomberg already reported that several Funds are starting to cut their bullish bets on raw materials including gasoline. The disappointing figures of the Philly Fed Manufacturing Index for August, and the further appreciation of the US dollar might assist crude oil prices to decline. In the near future, I still think WTI oil price will remain around $85-$90 mark and Brent oil around $110-$115, but during the 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):
2:30 – Monetary Policy meeting Australia’s Bank
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
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.