Crude oil prices continue to zigzag and moderately fell yesterday; these shifts in directions are in line with the shifts in the US stock markets; currently crude oil prices are traded down along with the US stock markets. Yesterday, the EIA reports showed that the US natural gas production is being disrupted by the weather, and the US crude oil stockpiles sharply fell. Today, the Canada employment report will be published and the Canadian Housing Starts report.
Here’s a short analysis of the crude oil market for today, September 9th:
Crude oil prices –September
On Thursday, September 8th crude oil price (WTI) slightly fell by 0.32% to $89.05/b; Brent oil price also declined by 2.72% to $114.30/b; during September WTI spot oil inclined by 0.27%; Brent oil fell by 1.87%.
The chart below shows the normalized prices of WTI spot oil and Brent oil during Mid August up to date (August 15th =100).
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil started to drop from the high level it had reached a few days ago. There was also an analysis on this gap between WTI and the rest of oil prices in the recent EIA report. The premium reached yesterday $25.25. During September, this premium fell by 8.75%. I explain the reasons for the large gap between Brent oil and WTI spot oil herein.
Crude oil News:
Libya may resume exports of crude oil this month for the first time since its civil war had begun back in March, 2011.
S&P500 / crude oil prices – September update
The S&P500 index changed direction again and declined yesterday by 1.06%. During September the S&P500 index slightly declined by 2.71%. During August-September the correlation between oil prices and S&P500 was 0.70 for Brent oil and 0.56 for WTI spot oil. If the Stock markets will continue to drop, crude oil prices are likely to follow and decrease as well.
U.S. unemployment claims – inclined by 2,000
According to the recent U.S. jobless claims report initial claims rose by 2,000 for the week ending on September 3rd to 414,000 claims (seasonally adjusted data). This news didn’t look well on the US labor market.
US Petroleum Stockpiles to be published today
The US Energy Information Administration published its weekly report on the U.S. petroleum market: according to report, U.S. Petroleum and oil stocks sharply fell last week by 9.2 million barrels and reached 1,784.9 million barrels.
Natural gas weekly report
The EIA also publish its weekly report regarding the changes in the natural gas market in the US for the week ending on September 2nd.
In the recent report, underground natural gas storage (Billion Cubic Feet) rose for the twenty-second straight week; last week by 2.2% to 3,025 billion cubic feet for all lower 48 states – the highest stock level since December 31st, 2011.
The recent Tropical Depression Lee entered the Gulf of Mexico and caused production shut downs. There may be further weather disputation in this Hurricane season (currently there are heavy rains in the East coast resulting in floods) that could further affect natural gas and crude oil market in the US.
On Today’s Agenda:
Canada unemployment rate and employment report: In the recent July report, employment slightly inclined, and unemployment rate slipped by 0.2 percent points to 7.2%. If this report will continue show an ongoing improvement in the Canadian labor market it might further strengthen the CAD and consequently might influence the prices of major commodities that CAD is correlated with, including crude oil prices.
Current crude oil prices
Major crude oil prices are currently traded down in the U.S. market:
The Nymex crude oil price, short term futures (October 2011 delivery) is traded at $86.20 / barrel, a $2.85/b decrease or 3.20%, as of 17:03*.
The Dated Brent spot oil price declines by $2.35/b to $111.95/ barrel as of 17:15*.
Thus, the current premium of Brent over WTI is at $25.75/b.
Crude oil price outlook and analysis:
The US stock market indexes moderately declined yesterday and crude oil prices fell as well. The high correlations between crude oil prices and stock market indexes in recent weeks continue to suggest that the current falls in crude oil prices are more a technical shift than a fundamental change. The news from Libya might continue to bring down the gap between Brent oil and WTI spot oil if the oil shipments will eventually prove to loosen the European oil market. Furthermore, if the recent weather disruptions will affect oil production and oil transport in the US it could also reduce the discount on WTI. In the near future, I still think WTI oil price will remain around $85-$90 mark and Brent oil around $108-$112, but throughout the month crude oil prices are likely to moderately decline.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
12:00 – Canada unemployment rate and employment report
13:15 – Canadian Housing Starts
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.