Crude oil prices bounced back and rose by over 2% after they had remained nearly unchanged a day earlier. Today Greece will decide on the budget cuts, but the news doesn’t seem to stir up the market for now. Related news that could affect crude oil prices today include the US petroleum stocks report by the EIA, and the US pending home sales.
Here’s a short analysis and outlook of the crude oil market for today, June 29th:
Crude oil prices – June 2011
On Tuesday, June 28th crude oil price (WTI) bounced back and inclined by 2.52% to $92.89/b; during June (UTD) WTI spot oil shed nearly 9.55% of its value.
Brent oil price, also inclined by 2.17% to $108.69/b; during June Brent oil declined by 7.25%.
The premium of Brent oil over WTI spot oil remained nearly unchanged and reached on Tuesday June 28th $15.8/b; this gap rose by 9.12% during June.
Following the spike in the premium of Brent oil over WTI on June 13th in which it reached $23.29/b, this premium fell to similar levels it was back in the beginning of June.
Petroleum stocks in the US
The US Energy Information Administration will publish today its weekly report on U.S. petroleum stocks: according to Bloomberg the U.S. crude oil stocks fell by 2.7 million barrels during last week. In the previous report, U.S. Petroleum and oil stocks rose during previous week by 3.084 million barrels, or by 0.17%. For the week ending on June 17th crude oil stocks reached 1,791 million barrels (See here the previous petroleum report).
US pending home sales
Today, the US home sales report will be published and will present the major changes in pending home sales during May 2011; in the recent report regarding April there was a decline in number of homes sold despite the rise during the March and February; this report is likely to show an ongoing decline in sales as the US economy is slowing down. If this will be the case, it might adversely affect crude oil prices: according to a research done by Roache et. al (2008) a working paper on the effects of news on commodities prices including crude oil prices, it was shown that a decline in the Existing home sales caused a significant adverse effect on crude oil prices the following day (a lag effect). If this will be the case, we might see a moderate downward effect on crude oil prices.
The Greek Debt and crude oil prices
Today the Greek parliament will vote on the major budget cuts proposed by Greece’s Prime Minister George Papandreou. There is heavy opposition against these budget cuts, but Failure to pass these budget cuts could result in the European Union not approving the recent bailout funds Greece needs to avoid default of its loans. Since the Euros to US dollar is strongly correlated with crude oil prices, the changes that this exchange rate will endure due to the news related to the Greek debt crisis could possible also affect crude oil prices. Currently, the news from Greece doesn’t seem to affect Euro/USD.
Current crude oil prices
Major crude oil prices are currently traded up at the Asian markets:
The Nymex crude oil price, short term futures (July 2011 delivery) is traded at $93.46 / barrel, a $0.57/b increase or 0.61%, as of 09:31*.
The Dated Brent spot oil price inclines by $0.44/b to $109.13 / barrel as of 09:41*.
Thus, the current premium of Brent over WTI is at $15.67/b.
Crude Oil price outlook and analysis:
The Greek debt will continue to affect Euros/USD and consequently might also affect crude oil prices; the news over IEA releasing 60 million bbl of crude oil might have brought down crude oil prices last week, but currently this affect is terminal as crude oil prices already started to bounce back; furthermore, crude oil prices might soon start to pick up again as we are entering the summer in which the seasonal effect will bring demand for oil up and hike crude oil prices again.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13.00 – Canadian Core CPI
15:00 – U.S. pending home sales
15:30 – EIA report about Crude oil inventories
8:00 – ECB conference Trichet speaks
09.00 – Monetary developments in the euro area
13:30 – Canada GDP by industry
13:30 – Department of Labor report – U.S. unemployment claims
15:30 – EIA report about Natural gas storage
For further reading: