Crude oil prices started the week the same way they have ended the previous week, with moderate falls; the upcoming OPEC meeting will set up its oil production in 2011. Let’s examine the crude oil market for today, June 6th:
Crude oil prices – June 2011
On Friday, June 3rd, crude oil price (WTI) declined to $100.22 – a 0.18% decrease; during June so far the WTI spot oil decreased by 2.4%.
Brent oil price also didn’t change much and inclined last week by 0.09% as it reached $115.90; during June Brent oil declined by 1.1%.
Following the rapid fall of crude oil prices at the beginning of May, they have remained unchanged during most of the month up to date.
The premium of Brent oil over WTI didn’t change much and reached on Friday, June 3rd $15.68/b.
The chart below presents the changes of this premium during May and June 2011. Despite the rapid changes during May, this gap remained around the $13 to $16 during the last couple of weeks.
US Dollar and crude oil prices – June
On Friday June 3rd, the US dollar weakened against major currencies, probably due, in part, to the recent US Labor report, the Canadian dollar and the EURO by 0.92% and 0.47%, respectively.
This change coincides with the decline in crude oil prices yesterday.
If the US dollar will continue to strengthen against these currencies, this might further weaken the crude oil prices.
S&P500 and crude oil – June update
The stock market daily changes (S&P500 index) also seem to coincide with the daily percent changes of major oil prices during May and June. The chart below shows the normalized (May 2nd =100) indexes of WTI, Brent oil and S&P500 during May and June. As seen, all these indexes seem to have taken a similar course during May and June (up to date).
This might indicate that the stock market movement and crude oil prices changes were positively correlated.
Upcoming OPEC meeting on June 8th
This week’s OPEC meeting on June 8th, in Vienna Austria will be around the Libyan war and whether or not OPEC will raise its reported oil production. Saudi Arabia is pushing to raise OPEC’s production due to the decline in Libyan oil production; according to Bloomberg Saudi Arabia will increase its oil production by 10% during this month.
In regards to Libya, it’s likely that OPEC won’t pick a side – the rebels’ or Qaddafi’s, because it’s still not clear who will come up victorious at the end of the war.
World news – oil markets
Ben’s speech- the Chairman of the Federal Reserve is set up to give a speech tomorrow about the economic outlook of the US economy. Following the recent publications of the economic indicators (PMI, Labor report GDP etc) showing the US economy isn’t recovering from its slowdown, it will be interesting to see what will Bernanke say in his speech, and whether he will tip his hand as to what is next for the Fed once the recent quantitative easing plan will end this month.
Following the recent assassination attempt on current President Ali Abdullah Saleh by bombing his palace, he was taken to Saudi Arabia to treat his wounds. The turmoil in Yemen continues with no clear end in sight.
Current crude oil prices
Major crude oil prices are currently traded with moderate falls at the Asian markets:
The Nymex crude oil price, short term futures (July 2011 delivery) is traded at $100 / barrel, a $0.22/b drop or 0.22%, as of 08:12*.
The Dated Brent spot oil price declines by $0.67/b and it is at $115.23 / barrel as of 08:23*.
Thus, the current premium of Brent over WTI is at $15.23/b.
Crude Oil price outlook and analysis:
Crude oil prices continue to demonstrate moderate changes as the financial markets is probably waiting for new information that will point out the direction of crude oil prices.
The U.S. labor report, which was published on Friday, implies that perhaps the Fed’s recent stimulus plan of the past several months didn’t do, for now, what it set out to do. i.e. jump start the US economy . This report, among other reports that also didn’t look well, might signal an upcoming decline in US demand for crude oil; if this will be the case, this might push down oil prices in the near future.
Furthermore, as stated above the upcoming OPEC meeting, in which OPEC might decide to raise its crude oil quota, might further push down crude oil prices as the oil market will loosen.
In the mean time, I still speculate that in the short term crude oil prices will remain at their current high prices around $100 per barrel for WTI and $115 for Brent oil.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – Canadian Building Permits
15:00 – Canadian Ivey PMI
5:30 – Reserve Bank of Australia – rate statements
14:00 – Ben Bernanke, Chairman of Fed, speaks
For further reading:
- Weekly outlook for June 6 – 10
- Oil prices started June with little changes – Weekly recap 31 May- 3 June