Crude oil prices keep on zigzagging as they finished yesterday with sharp rises after the US oil stocks was published showing a moderate rise. Today, the Canadian and U.S. labor report will be published.
Here’s a short analysis and outlook of the crude oil market for today, July 8th:
Crude oil prices – July 2011
On Thursday, July 7th crude oil price (WTI) bounced back and inclined by 2.07% to $98.67/b; during July WTI spot oil added nearly 3.4% to its value.
Brent oil price, also continued to rise, yesterday by 4.28% to $118.41/b – the highest price level since June 14th; during July Brent oil rose by 6%.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil rose again as it reached on Thursday July 7th $19.74/b – the widest gap since June 17th; this gap rose by 20.29% during July.
Following the spike in the premium of Brent oil over WTI on June 13th in which it reached $23.29/b, this premium declined to $14-18 range since then; yesterday, however it rose again; this could be just an outlier as it’s too soon to rule it a shift in the trend.
US Petroleum stocks rose last week
The US Energy Information Administration published yesterday its weekly report on U.S. petroleum stocks: there wasn’t a sharp shift in the stocks as the U.S. Petroleum and oil stocks very moderately inclined by 477 thousand barrels, or by 0.03%. For the week ending on July 1st crude oil stocks reached 1,792 million barrels (See here the recent petroleum report).
The chart below shows the petroleum and oil stocks levels compared to the WTI crude oil prices during 2010-2011.
US Labor report
The US labor report is likely to affect the US dollar if it will surprise the market (see here the recent update on Labor report and its effect on oil prices). The current expectations are that the upcoming June 2011 will show an improvement compared with May’s report; some estimate the rate will remain unchanged at 9.1% and the number of non-farm payroll employment will increase by nearly 100,000.
ECB rate decision
Following yesterday’s decision of the European Central Bank to raise its rate by 0.25 percent points to 1.5%, the market didn’t react much to the news as the Euros to US dollar only moderately inclined (see here for more on the ECB rate decision analysis). Historically, this decision didn’t seem to have a significant effect on crude oil prices; yesterday it might have been among the factors to push oil prices up; in the last rate raise back in April 13th by 0.25% points, crude oil price inclined the following days by less than 1.5% (each day); therefore, this decision might positively have affected crude oil prices, but as stated there is no evidence to support that this affect is significant.
Current crude oil prices
Major crude oil prices are currently traded down in the European markets:
The Nymex crude oil price, short term futures (August 2011 delivery) is traded at $98.15 / barrel, a $0.52/b decrease or 0.53%, as of 11:52*.
The Dated Brent spot oil price declines by $0.92/b to $117.48 / barrel as of 12:03*.
Thus, the current premium of Brent over WTI is at $19.33/b.
Crude oil price outlook and analysis:
There are still expectations the demand for crude oil will likely to rise and affect crude oil prices to maintain their high level in the near future. The upcoming US labor report is likely to have a significant effect on the US dollar that might consequently have a moderate effect on crude oil prices, but more likely to have no apparent effect on oil market.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
12:00 – Canada unemployment rate and employment report
13.30 – US unemployment rate report & non-farm employment change
For further reading: