Crude oil price forecast for 27 April 2011

Oil prices remain at their high level with little volatility in the last couple of days. Let’s examine the main news items related to the energy market including the recent events in the Middle East that might affect the stability of the commodities markets.

Here are main news items for today, April 27^th:

Crude oil prices during April

Up to yesterday, April 26^th, WTI spot oil moderately inclined by 4.33%, and Brent oil rose by 4.46%. Yesterday, WTI and Brent oil moderately inclined while NYMEX WTI future price declined.

Petroleum stocks in the US

The EIA will publish today its weekly report on petroleum stocks: According to Bloomberg the expectations are that US crude oil stocks increased by 1.7 million barrels during last week. In the last report, US petroleum declined by 6.7 million barrels, which is a 0.38% drop compared to the previous week. For the week ending on April 15th the stocks reached 1,757.2 million barrels. This was the largest withdraw since February 18th, 2011 (For the previous petroleum report, see here). There is also speculation that US oil imports from Europe declined during April.

Libyan war – update

According to the Guardian, Libyan officials are at Caracas, Venezuela to find ways to resolve the current turmoil in Libya.

In the mean time, the fighting in Libya continues according to Reuters, as there are heavy bombing in Misrata between Gaddafi’s troops and the rebels’ forces.

There are also reports that Libya’s oil production decline since the war commenced back in mid February affected the profits of major refiners in Europe. The Libyan oil accounted for nearly 8.8% of the world’s light sweet crude oil supply during 2010, even though for the out of the entire crude oil supply the Libyan oil only accounts nearly 2%. This type of oil has a larger premium over sour crude oil, and thus responsible for higher profits. Therefore, the war in Libya affected the profits of oil refineries.

Violent confrontations in Syria – update

At least 400 people died during the violent confrontations between the Syrian army and civilian protestors against the current regime and current President of Syria Bashar al-Assad, during the last several days.

U.S. is considering implementing some sanctions against Syria because of the violent forces used on civilians.

Progress in Yemen

Following the announcement that President Ali Abdullah Saleh is step down from his Presidency within a month in exchange for immunity against any future prosecution, the opposition may accept Saleh’s condition. Bloomberg reports that the two sides are set to meet in Saudi Arabia to sign an accord by next week.

This turn of events might curb some of the riots in Yemen and bring some stability to the region and any uncertainty, if any that this news brought to the commodities markets might be subside.

Current crude oil prices

Major oil prices are currently traded in the European markets with moderate rises:

The Nymex crude oil price, short term futures (May 2011 delivery) is traded at 112.65 USD / barrel, a 0.44 USD/b increase or 0.39%, as of 11.08*.

The Dated Brent spot crude oil inclines by 0.88$/b and it is at 124.80 USD / barrel as of 11.19*.

(* GMT)

Thus, the current premium of Brent over WTI is at 12.15$/b.

Crude Oil price outlook and analysis:

Crude oil prices continue with moderate changes and no clear trend. The events in the Middle East keep on having little to no effect on the commodities markets for now, as oil prices are high and already incorporate most of the uncertainty that is attributed to the instability in the Middle East

Therefore I still speculate that WTI oil price will continue to increase but very moderately along with Brent oil; Furthermore, crude oil prices might remain at a high level, but in the mid to long term will eventually come down, once the uncertainty around the supply of oil will dissipate.

Difference between Brent oil and WTI spread: as of yesterday, April 26^th, the premium of Brent oil over WTI very moderately declined to 11.71$/b- the lowest level since April 4^th.

The premium of Brent oil over WTI continues to slide and the volatility of keeps on rising as seen in the chart below. This is still a double figure gap but it’s still early to conclude if this recent decline will be the start of the closing of the gap between these two energy prices; for now I speculate that the premium might continue to moderately decline and range between 10 and 13 USD during the rest of the week.

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

Post navigation