Oil prices Monthly outlook – August 2011

Crude oil prices started off July with sharp rises, but afterwards stabilized and ended the month with moderate falls. The same can’t be said for August that started with very sharp falls. Will this trend continue throughout August? I will present herein the main changes in crude oil prices (WTI and Brent oil) during July, and provide an outlook for crude oil prices for August 2011:

During July 2011 WTI spot oil prices nearly didn’t change and finished 0.4% above its initial price level; Brent oil price increased by 3.78%; these moderate rises were curbed, in part, by the IEA decision to release 60 million barrels of crude oil from its emergency supply during July. The average prices in July also rose by 1.08% for WTI spot oil and 2.76% for Brent oil compared with June’s.

 

Crude spot oil price WTI and Brent oil 2011 JULY  AUGUST 3

 The chart above shows the changes in both major energy commodities’ prices (Brent oil and WTI spot oil). It shows the rises mainly for Brent oil during the first week of July, and the stability that followed for these commodities prices during the rest of the month.

The standard deviation of crude oil prices declined substantially in July compared with June’s. The standard deviations of WTI oil and Brent oil daily prices reached similar values as in April 2011, when crude oil prices moderately rose.

These figures indicate that crude oil prices’ volatility decreased in July as the uncertainty in the oil market fell.

 

standard deviation of the spot oil prices  WTI and Brent spot oil 2010-2011 (Monthly) AUGUST 3

 Brent premium over WTI 

The Difference between the two commodities fluctuated during July ranging between $15 and $22 and it has peaked during the second week of July.

Difference between Brent and WTI crude spot oil price 2011 JULY

Its variance sharply declined and reached $3.36 in July compared with $6.42 during June 2011. This is another indication that the level of volatility in the oil market has subsided.

Variance of the difference between WTI and Brent spot oil 2010-2011 (Monthly) AUGUST

  For further reading:

6 comments for “Oil prices Monthly outlook – August 2011

  1. John F. Oltmann
    August 18, 2011 at 7:24 pm

    Will gas prices ever be below $3.oo per gallon again..If gas prices were below $2.50 per gallon the economy would boom..

    • August 18, 2011 at 9:03 pm

      Hi John,
      Thanks for your comment.
      As you well know gas prices are derived from the oil prices. The last time the average gasoline prices in the US fell below $3/g was back in Nov 2010, when the average oil prices were around the $84/b mark. Current oil prices are at $83. This means if oil prices will maintain this low level price it will eventually catch up with gasoline prices and bring them down; the problem is for how long oil prices will maintain the currently low price level before rising again…
      Cheers,
      Lior

      • Jennifer
        August 22, 2011 at 9:34 pm

        I don’t understand this answer. If prices in Nov. 2010 at $84 per barrell were below $3.00 per gallon, then why at current prices of $78 per barrell are we at $3.60 per gallon and up? What is the disparity between the two years?

        • August 22, 2011 at 9:56 pm

          Hi Jennifer,
          I meant that I think it takes time until gasoline prices are updated to the crude oil prices, especially in the current highly volatile market: the current market is much more volatile than ehat it was back in 2010 (the var of weekly % changes oil prices in 2011 is 0.2%; in 2010 it was 0.1%) , therefore the prices aren’t updated to the full extent, e.g. during the week ending on Aug 12th WTI spot oil fell by 8.79% but gasoline prices fell by only 1.83%. Finally, Don’t forget that oil sellers update falls much less promptly than price hikes…Hope this clears up my point.

  2. j.vayian
    August 19, 2011 at 11:40 pm

    Oil is in its death throes. Wild swings predicted before its demise. Lots of money to be made if keeping close watch but get off the roller coaster if you are inclined to throw up from the stress. After 23 yrs at this I’m outta here. Good luck!

Comments are closed.