Crude oil prices finished yesterday with moderate falls after the U.S. House approved raising debt ceiling to $16.4 trillion. This news has brought back some stability to the market. Today, the U.S. Personal Spending report will be published along with Australian trade balance and Australian retail sales.
Here’s a short analysis and outlook of the crude oil market for today, August 2nd:
Crude oil prices –August
On Monday, August 1st crude oil price (WTI) declined by 0.85% to $94.89/b; this is the second straight business day in which crude oil prices were traded down.
Brent oil price also fell by 0.48% to $116.25/b; during July Brent oil inclined by 4.57%.
The chart below presents the normalized prices of WTI spot oil and Brent oil during mid July and August (July 15th=100). It shows the rise and fall of crude oil prices mainly during the past week.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil continues to rise as it inclined on Monday August 2nd to $21.36/b; during July this premium rose by 28.64%, mainly because Brent oil price outperformed WTI spot oil price during the first week of July.
US debt ceiling
The House of Representatives voted to raise the US debt ceiling. The financial markets reacted as the US dollar appreciated against major currencies (see below) and crude oil prices traded down. But this effect will likely to end very soon as the US economy is still not performing well and its debt will continue to rise.
US dollar / Crude oil prices – August update
On Monday, Euro to US dollar exchange rate declined by 1.03%; the US dollar to Canadian dollar inclined by 0.20%; the Australian dollar to US dollar fell by 0.20%; this means that US dollar moderately appreciated against major currencies. The U.S. debt ceiling news might have affected traders to trade up US dollar, but this news is likely to have a short term effect on US dollar.
US ISM Manufacturing PMI
This report was published yesterday and showed a decline in the growth rate in July as ISM Manufacturing PMI reached to 50.9% a 4.4 percent points decrease compared with the previous month’s index. This news usually has little effect on crude oil prices, but it might affect the US dollar and thus indirectly affecting crude oil prices.
Crude oil market news
Here are several news items that are related to the crude oil market:
- Brazilian demand for refined oil products will keep on rising; this will force Brail to increase its imports of oil;
- According to BP report, it’s estimated that Australia’s oil and liquefied natural gas output will incline by 2012;
- India to buy Saudi Arabia oil; OPEC oil output is claimed to incline during July to its highest oil output in three years;
Current crude oil prices
Major crude oil prices are currently traded with mixed trend in the European market:
The Nymex crude oil price, short term futures (September 2011 delivery) is traded at $94.42 / barrel, a $0.47/b decrease or 0.5%, as of 11:38*.
The Dated Brent spot oil price inclines by $0.06/b to $116.31/ barrel as of 11:49*.
Thus, the current premium of Brent over WTI is at $21.89/b.
Crude oil price outlook and analysis:
Crude oil prices started August with moderate falls, after they had ended last week the same way. This recent downward trend might be stem from the increased output in OPEC mainly Saudi Arabia; OPEC monthly report will reveal this matter (to be published next week); in the short term, crude oil price are likely to remain near $97-$100 for WTI spot oil and $116-$118 for Brent oil, but they might start to slowly pick up again during the week.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – US Personal Spending
2:30 – Australian trade of Balance
2:30 – Australian Retail Sales
15.00 – U.S. ISM Non-Manufacturing PMI
15:30 – EIA report about Crude oil inventories
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.