Crude oil prices continued yesterday their slow recovery from September’s sharp falls; currently crude oil prices are traded up. Today, the IEDA monthly report will be out, the minutes of the recent FOMC meeting, EIA Report on Oil Stockpiles, Australia’s unemployment rate and Jean Claude Trichet will publicly speak about the European crisis.
Here’s an outlook and analysis of the crude oil market for today, October 12th:
Crude Oil Prices – October Update
On Tuesday, October 11th crude oil price (WTI) slightly rose by 0.47% to $85.81/b; Brent oil price also add 0.66% to it value and settled at $109.35/b; during October WTI spot oil rose by 4.32% and Brent oil price by 3.04%.
The chart below presents the prices development of WTI spot oil and Brent oil during October (prices are normalized to 100= 30 of September).
Premium of Brent over WTI – October Update
The premium of Brent oil over WTI spot oil slightly inclined on Tuesday to $23.54. During October the premium nearly didn’t change as it declined by only 0.04%.
On Today’s Agenda:
Crude Oil Stockpiles Report: the Energy Information Administration will publish its weekly report on the U.S Petroleum market for last week. The current estimates are that the crude oil stockpiles rose by 800 thousand barrels according to Bloomberg; in the previous report, the U.S petroleum & oil stockpiles slightly declined by 4.6 million barrels to 1,770.5 million barrels (see here the recent oil stockpiles review);
FOMC Meeting Minutes: Following the last FOMC meeting, in which the Fed’s plan to purchase LT securities at $400 billion was announced, the minutes might provide insight regarding that decision, and thus add some more information regarding the next steps of the FOMC in the near future that could affect markets (see here FOMC decision);
ECB Conference Trichet Speaks;
Australia Unemployment Rate: in the last report the unemployment rate slightly rose to 5.3%, and the number of employed slightly decreased by 9,700 during August. If this trend will continue it could affect the AUD/USD exchanges rate and consequently perhaps energy prices (see here the recent report);
IEA monthly oil report: this upcoming report will show an updated (as of September 2011) outlook and analysis for the global crude oil market for 2011 and 2012 (See here a summary of the last report);
Chinese CPI: in August, the Chinese inflation rate slightly slipped compared with July’s CPI and reached an annual rate of 6.2% (it was 6.5% in July); this figure is still above the China’s inflation target of 4% in annual terms. It could induce the People Bank of China’s attempts to curb the inflation pressures are starting to work and thus may affect the demand for oil;
Forex Market and Crude Oil Prices – October
The USD/CAD exchange rate slightly inclined on Tuesday by 0.40%. Furthermore, the USD slightly appreciated against the AUD, GBP and CHF. The speculation around the European crisis continues to affect the forex markets on a daily basis and consequently also affects the energy prices. If the U.S dollar will depreciate against the above-mentioned currencies as it did during most of October, this trend may also push crude oil prices up.
U.S. Stock Market / Crude Oil Prices – October
The S&P500 index slightly inclined on Tuesday by 0.05% to reach 1,195.54. During recent months there was a strong positive correlation between crude oil prices and S&P500 index (e.g. for WTI it was 0.527 and for Brent oil it was 0.485 in October (UTD). If the U.S stock market will continue to incline, it may further affect crude oil prices to increase as well.
Current Crude Oil Prices
Major crude oil prices are currently traded up in the European market:
The Nymex crude oil price, short term futures (November 2011 delivery) is traded at $86.49/ barrel, a $0.68/b increase or 0.79%, as of 11:07*.
The Dated Brent spot oil price inclines by $2.39/b to $111.74/ barrel as of 11:07*.
Thus, the current premium of Brent over WTI is at $25.25/b.
Crude Oil Prices Outlook and Analysis:
Crude oil prices continue to make their comeback from the sharp falls recorded in September as the U.S. and European markets are also recovering and the US dollar further is falling against other major currencies that are usually correlated with crude oil prices (e.g. AUD and CAD). The speculation around the European debt crisis will continue to affect the high speculation in the financial markets and may also affect crude oil prices to incline. I speculate that WTI oil price will revolve around $83-$88 mark and Brent oil price will be around $105-$113 during the week.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
Tentative –IEA monthly oil report
15:30 – EIA Report on Crude Oil Stockpiles
19:30 – FOMC meeting minutes
19:30 – ECB Conference Trichet Speaks
2:30 – Australia Rate of Unemployment
For further reading:
- Weekly Outlook for October 10-14
- Gold and Silver Prices Monthly Outlook for October 2011
- Natural gas prices outlook for September 2011
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.