Crude Oil Prices – Daily Outlook October 25

Crude oil prices very sharply inclined yesterday; this increase is probably related to the renewed expectations of sharp gains in the demand for oil in the American market. Currently crude oil prices are traded up. Today, U.S Consumer Confidence report will be published; Canada’s Retails Sales; and Canada’s Overnight Rate.

 Here’s an outlook and analysis of the crude oil market for today, October 25th:

 Crude Oil Prices – October Update

On Monday, October 24th crude oil price (WTI) sharply increased by 4.53% to $91.17/b; Brent oil price also rose by 1.24% to $112.15/b; during October WTI spot oil rose by 11.36% and Brent oil price by 6.38%.

The chart below presents the development of WTI spot oil and Brent oil prices during the recent months from August to October.


Crude spot oil price forecast 2011 Brent oil and WTI spot oil  2011 October 25

Premium of Brent over WTI – October Update

The premium of Brent oil over WTI spot oil sharply declined on Monday to $20.98 – the lowest premium since August 5th, 2011 . During October the premium fell by 10.91%.

Difference between Brent and WTI crude spot oil price forecast 2011 October 25

Hedge Funds Bullish on Commodities

According to a report, Hedge funds are renewing their bullish bets in raw materials over the expectations that the U.S. economy is coming out of its slowdown.

On Today’s Agenda:

U.S Consumer Confidence: the consumer confidence index remained nearly unchanged in September compared with August’s index. The current expectations are that this index may continue to decline in the upcoming report;

Core Retails Sales Canada: This report presents the changes in the retails sales in Canada in August. It may affect the USD/CAD and thus also the crude oil prices (see here the full report);

Canada Overnight Rate: The Bank of Canada will publish its decision regarding the overnight interest rate, which remained unchanged at 1% as of last month;

Forex Market and Crude Oil Prices – October

The AUD/USD exchange rate increased again on Monday by 0.95%. Furthermore, the USD also depreciated against other top currencies including the Euro, GBP and CAD. The ongoing concerns revolving the European debt crisis continues to affect forex and commodities traders. If the U.S dollar will further depreciate against the risk currencies (AUD, CAD) as it did during recent week, this may also affect crude oil prices to incline.

U.S. Stock Market / Crude Oil Prices – October

The S&P500 index sharply rose on Monday by 1.29% to 1,254 and completed a rally of 10.85% during October (UTD); during recent months there was a strong positive correlation between crude oil prices and S&P500 index (e.g. during October the correlation with WTI oil price was 0.620 and with Brent oil 0.597). The chart below shows the progress of the WTI and Brent oil prices vs. the S&P500 index during October.

If the American stock markets will continue their rally as they did in recent weeks, it may also contribute to the gains in crude oil prices ( especially in the WTI oil price).

chart CRUDE OIL WTI SPOT OIL and SNP500  October 2011 October 25

Current Crude Oil Prices


Major crude oil prices are currently traded sharply up in the European market:

Nymex crude oil price, short term futures (November 2011 delivery) is traded at $93.75/ barrel, a $2.48 /b increase or 2.72%, as of 12:10*.

Brent oil price inclines by $1.36/b to $113.5/ barrel as of 12:10*.

(* GMT)

Thus, the current premium of Brent over WTI is at $19.75/b.

Crude Oil Prices Forecast and Analysis:

The recent gains in the American oil market as there are renewed expectations of growth in the demand for oil in the U.S. may have helped close the gap between Brent oil and WTI in recent weeks. Furthermore, the ongoing rally in the American stock markets also helped push up the WTI oil prices, while the debacle in the negotiations in the EU summit may have curbed the expectations of growth in the demand for oil in the European market so that Brent oil is rising much more moderately than WTI oil price.

Therefore I speculate that during the week WTI oil price will revolve around $87-$95 mark and Brent oil price around $108-$115.    

Here is a reminder of the top events and reports that are planed for today (all times GMT):


13:30 – Core Retails Sales Canada (August 2011)

14:00 – Canada Overnight Rate

15:00 – U.S Consumer Confidence

For further reading:


Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.

3 comments for “Crude Oil Prices – Daily Outlook October 25

  1. haroon sabar
    October 26, 2011 at 1:52 pm

    Dear Lior,

    i pray all is well, its been a while since we last spoke. Do you actually see crude 87-95 mark, some traders are saying the next range is 95-100 which could be been by next week due to :-

    1) tight supplies
    2)chinese PMI was positive
    4)the premium closing between wti v brent

    • October 26, 2011 at 6:12 pm

      Dear Haroon,

      Thanks for your question and kind words they are much appreciated as always.

      In regards to oil prices, I referred to the bench mark of 87-95 for WTI for this week (next week is a different story). You have made good points for oil prices to rise and there might be a rise in this mark to the suggested numbers of 95-100 if, among other, there will be change in the fundamentals, mainly the US GDP report to be published tomorrow.
      The rally in the US stock market was probably among the factors to push US oil prices up and if the upward trend in the US market will shift to downward, it may also curb the recent rally in the crude oil prices.

      These are my two cents on this issue.

      What do you think?


      • haroon sabar
        November 10, 2011 at 2:28 pm

        Dear Lior,

        Apologies for the late reply, my sentiments were crude would push up further which it did and also now with the geopolitical risks in Iran would get us closer to a $100 from a Technical Analysis point of view buyers will come in now that we have settled above $95.. we could see profit taking at $100. there fore in the short -term we will range from 95-100 and not forgetting the Eurozone issues

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