Crude oil prices had a bit of a comeback in the last couple of days. The recent OPEC meeting didn’t bring any annunciation in regards to OPEC’s oil production quota. This might keep oil prices at their current high level. On the other hand the recent US oil stockpiles continue to rise. Let’s review and analyze the crude oil market for today, June 9th:
Crude oil prices – June 2011
Yesterday, June 8th, crude oil price (WTI) inclined to $100.74 – a 1.67% increase; during June so far the WTI spot oil decreased by 1.91%.
Brent oil price also increased by 0.64%, and it reached $117.43; during June Brent oil inclined by 0.21%.
The premium of Brent oil over WTI rose by 15.26% in June as it reached on Wednesday, June 8th $16.69/b.
The chart below shows the changes of this premium during May and June 2011.
Yesterday, in Vienna Austria OPEC members convened to try and reach an agreement as to OPEC’s oil production quota for 2011.
There were expectations by some that OPEC will raise its oil production quota, despite the opposition for this maneuver, which was led by Iran and Venezuela.
Nevertheless, OPEC didn’t come up with a decision and left the official oil production at its current level (for more on the OPEC meeting see here).
This news will help keep oil prices at their current level and might even push them further up if the global oil demand will incline and the turmoil in Libya will remain at its current condition.
Petroleum stocks in the US
The US Energy Information Administration published its weekly report on U.S. petroleum stocks: According to the report U.S. oil stocks rose by 1.47 million barrels, or by 0.08%. For the week ending on June 3rd crude oil stocks reached 1,789 million barrels – the highest level since February 11th, 2011 (See here the recent petroleum report). This recent news indicates that the oil market in the U.S. continues to cool down.
The EIA will also issue today its short term oil market outlook and analysis of the oil supply. Trading NRG will review the highlights of this report.
ECB conference and rate decision
Today there is an ECB press conference in which Jean Claude Trichet, President of the European Central Bank, will talk about the progress of the European Union’s economy, ECB’s monetary policy and probably will refer to the debt restructuring of Greece. ECB will also decide on the interest rate which is currently at 1.25%, if ECB will decide to raise the rate, it could strengthen the Euro and might also affect major commodities prices such as crude oil prices and further help their recent rally.
Current crude oil prices
Major crude oil prices are currently traded with moderate falls at the European markets:
The Nymex crude oil price, short term futures (July 2011 delivery) is traded at $101.35 / barrel, a $0.61/b rise or 0.61%, as of 07:17*.
The Dated Brent spot oil price inclines by $0.65/b and it is at $118.08 / barrel as of 07:29*.
Thus, the current premium of Brent over WTI is at $16.73/b.
Crude Oil price outlook and analysis:
From the supply side, crude oil prices are likely to remain high and might even push further up following the disappointing OPEC meeting, in which the members didn’t reach an agreement on raising the oil production quota.
But from the demand side, the recent economic indicators show that U.S. economy is still not picking up; the upcoming EIA oil market outlook might even show a slowdown in global oil demand growth for the rest of 2011. These news items indicate that the demand for oil might slow down and as a result ease the rise of crude oil prices.
From monetary point of view, the upcoming ECB rate decision might affect the Euros to USD exchange rate and consequently affect crude oil prices.
All these factors push oil prices in different directions; therefore until additional news will arise, I think that 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 Trade balance
13.30 – Report on American Trade balance
13.30 – ECB conference rate decision
13.30 – Department of Labor report – U.S. unemployment claims
15.30 – EIA report about Natural gas storage
Chinese Trade Balance report
12:00 – Canada unemployment rate and employment report
For further reading:
- Weekly outlook for June 6 – 10
- Oil prices started June with little changes – Weekly recap 31 May- 3 June