Oil prices Monthly outlook –July 2011

Crude oil prices started off June with moderate changes and soon started to plummet mainly during the second half of June; despite this decline, will this trend continue in July or will there be a shift in direction?

I will present herein the main changes in crude oil prices (WTI and Brent) during June, and provide a crude oil prices outlook for July 2011:

During June 2011 WTI oil prices fell by 7.09%, and Brent  decreased by 4.7%; these falls continue to downward trend of crude oil prices during May. The average prices in June also fell by 4.6% for WTI and 1% for Brent  compared with May’s.

Crude spot oil price WTI and Brent oil 2011 JUNE JULY 1

 The chart above is normalized to 100= May 31st for both major energy commodities (Brent oil and WTI spot oil). The chart shows the sharp falls in crude oil prices mainly during the second half of June.

The standard deviation of the daily percent changes in crude oil prices declined compared with May’s, but were still high than recent months. The standard deviations of the WTI oil and Brent oil daily prices reached similar values in February 2011, when  oil prices rose sharply due to the turmoil in Middle East.

These figures indicate that crude oil prices’ volatility remained high during June, but were less volatile than in May.

standard deviation of the spot oil prices  WTI and Brent spot oil 2010-2011 (Monthly) JULY 1

Brent oil premium over WTI spot oil

The Difference between the two commodities fluctuated during June and ranged between $13 and $23 and peaked at the middle of June. Its standard deviation also rose and reached $2.52 compared with $1.53 during May 2011.

 Difference between Brent and WTI crude spot oil price 2011 June

Crude oil prices and US Dollar

During June there were high correlations among daily percent changes in crude oil prices (WTI and Brent oil) and EUR/USD, AUD/USD, USD/CNY & USD/CAD. I.e. there was a negative correlation between the (daily percent changes) US dollar and crude oil prices.

Correlations wti and Brent spot oil prices with MAJOR CURRENCIES JUNE 2011

During the month, EUR/USD rose by 0.88%; AUD/USD rose by 0.58%; and USD/CAD fell by 0.56%. These figures show that US dollar depreciated during the month compared to other currencies. That being said, the daily fluctuations (around the trend) and not the trend of these exchange rates were probably linked to the daily percent changes of crude oil prices.

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3 comments for “Oil prices Monthly outlook –July 2011

  1. Darshan Shroff
    July 12, 2011 at 5:22 am

    Great analysis.. Expect ATF prices to come down to 94-97$ mark.. Good time to buy Avitaion Stocks..

    • July 13, 2011 at 12:40 pm

      Thanks Darshan for the kind words they are much appreciated.
      Lior

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