Daily Outlook for major Commodities – November 29th

The holidays are over for now, and a new week is a head of us so let’s see what we have on the agenda for today (all times are GMT):

  • At 10.30AM: The office Budget Responsibility in Great Britain will release the Government autumn statement which will present an economic outlook and a preview of the government budget for 2011. If the projections will not be positive, it could affect the outlook on the level of consumption in natural gas and crude oil in the UK for 2011, and consequentially could have a lowering effect on crude oil prices and natural gas prices.
  • At 7.30 PM: The Australian bureau of statistics will publish the country’s current account of balance of trade (Balance of Payments and International Investment Position) for the third quarter of 2010. Australia is one of the largest exporters of energy commodities such as crude oil and coal, and metals such as gold and Iron ore, mainly to China and Japan. By analyzing the trade balance, it could show if there is an upward or downward trend in the level of demand for these commodities and how, if any, this news could affect commodities prices such as crude oil price and gold prices. Recall that AUD is strongly correlated to crude oil prices; only last month the correlation of AUD and crude oil prices percent daily change was 0.68.

What’s the talk around the water-cooler?

In Bloomberg, there are talks that investors bet crude oil prices will reach the 100 USD mark. This prediction is based on option prices for December 2011 at 100 USD /barrel increasing by 14 percent on November 24th. Bloomberg also refer to the news which caused crude oil prices dropping in the passing weeks such as China’s attempt to cool down its economy by raising its banks monetary reserves, the US showing some strength in its economy and Ireland’s bailout progress, all of which I have referred to in a previous post.

From a quick view of April 2011 future prices (the longest term in the EIA website), the settled prices are still around 82-83 USD per barrel, and in the last seven months the highest it got was at roughly 89 USD per barrel, during the second week of November. This rise was probably due to the new around the Quantitative easing of the Federal Reserve in the US. Therefore, for now, it seems that for the next several months traders don’t believe crude oil prices will be rising substantially.