Crude oil prices continue to seek direction after their rapid rise at the beginning of July. Despite the concerns from Europe about the debt of Greece and Portugal, and the US debt ceiling debate, oil prices remain high at the 95-100 dollar mark for WTI spot oil. Today, the US TIC long term purchases report will be published; the Australian bank will make its decision on the overnight rate.
Here’s a short analysis and outlook of the crude oil market for today, July 18th:
Crude oil prices – July 2011
On Friday, July 15th crude oil price (WTI) rose by 1.62% to $97.24/b; during July WTI spot oil inclined by 2.89%.
Brent oil price also rose by 0.71% to $117.72/b; during July Brent oil rose by 5.38%.
The chart below shows the changes of WTI spot oil and Brent oil price during July, in which they are both normalized to 100=30 of June.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil continue to remain high as it reached on Friday July 15th $20.48/b; this gap rose by 24.48% during July, mainly because Brent oil price rose while WTI spot oil price nearly didn’t change.
Notice that the standard deviation of the crude oil prices declined in July compared to previous months’, which means the volatility of crude oil prices fell sharply.
Middle East news regarding Oil production
Libya: rebels and government troops continue to fight over the oil city of Brega while NATO forces renewed their air strikes over Tripoli; the Libyan oil production continued to be low and reached in June nearly 111 thousand bbl/d compared to nearly 1.6 million bll/d during 2010.
Iran plans to invest nearly $18 billion in the crude oil fields in the South of Iran that may produce as much as 3 million barrels per day.
Yemen is starting to pump crude oil from the repaired main pipelines after a five month halt caused by attacks on the pipelines.
US debt ceiling concerns
The US will need to decide on raising the debt ceiling by the beginning of August; it’s mostly likely to be passed in the next couple of weeks, but in the mean time the internet continues to explore this issue. Moody’s rating agency even went one step further and suggested the United States to eliminate its statutory limit on government debt in order to reduce uncertainty among bond holders.
Euro and US dollar / Crude oil prices – July update
During July the Euro to US dollar exchange rate fell by 2.4% probably over the debt concerns of the European market news about Moody’s rating and Bernanke’s speech. During June, the EURO/USD exchange rate was highly correlated with the daily percent changes of crude oil prices. This might suggest that the EURO/USD rise might have coincided with the recent added value to crude oil prices.
Current crude oil prices
Major crude oil prices are currently traded down in the US markets:
The Nymex crude oil price, short term futures (August 2011 delivery) is traded at $96.75 / barrel, a $0.49/b decrease or 0.50%, as of 12:45*.
The Dated Brent spot oil price declines by $1.19/b to $116.54/ barrel as of 12:57*.
Thus, the current premium of Brent over WTI is at $19.79/b.
Crude oil price outlook and analysis:
Crude oil prices continue to seek direction, despite their sharp rises at he beginning of July; they might continue to moderately change throughout the rest of the week over the currency effect of the changes in US dollar and Euro. There are still fundamental factors to keep crude oil prices high including the expected growth in demand, and the uncertainty over the supply from OPEC.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
14:00 – US TIC long term purchases
2.30 – Monetary Policy meeting Australia’s Bank
13.30 – U.S. Building Permits
13.30 – U.S. Housing Starts
14.00 – Canada overnight rate
15:00 – U.S. existing home sales
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