Crude oil prices started the day with sharp falls. Today the US CPI will be published along with the US petroleum and oil report. Let’s review and analyze the crude oil market for today, June 15th:
Crude oil prices – June 2011
Yesterday, June 14th, crude oil price (WTI) bounced back and rose to $99.37 – a 2.13% increase; during June (UTD) WTI spot oil decreased by 3.24%.
Brent oil price also moderately increased by 1.04%, and it reached $119.53; during June Brent oil inclined by 2.01%.
The difference between Brent oil and WTI spot oil
The premium of Brent oil over WTI rose by 39.23% during June as it reached on Tuesday, June 14th $20.16/b.
As seen in the chart below, the difference between Brent oil and WTI started to pick up in the last few days.
These findings might indicate that European crude oil market where Brent oil is consumed (among other continents) is further tightening compared with the US oil market.
S&P500 and Crude oil prices
During April and May there were strong positive linear correlations among crude oil prices daily percent changes and S&P500 index. These correlations continue in June as seen in the chart below.
These findings may indicate that oil prices are linked with the changes in the US stock market.
Petroleum stocks in the US
The US Energy Information Administration will publish today its weekly report on U.S. petroleum stocks: Bloomberg estimates that U.S. oil stocks dropped by 363 thousand barrels during last week. In the previous report, U.S. Petroleum and oil stocks moderately inclined during last week by 1.47 million barrels or by 0.08% (See here the recent petroleum report).
US Consumer price index
Following yesterday’s report on the US PPI in which the May PPI inclined by 0.2% compared with April, today the Consumer price index will be published. The expectations are that the CPI will incline by a similar rate to the PPI, i.e. by 0.2%. In the last report, the US inflation increased by 0.4% for April. This news could cause the US dollar to depreciate against major currencies and consequently might drive gold and silver prices further up.
Current crude oil prices
Major crude oil prices are currently traded with sharp falls at the US markets:
The Nymex crude oil price, short term futures (July 2011 delivery) is traded at $95.29 / barrel, a $4.08/b decrease or 4.11%, as of 09:10*.
The Dated Brent spot oil price declines by $5.42/b and it is at $114.12 / barrel as of 09:21*.
Thus, the current premium of Brent over WTI is at $18.83/b.
Crude Oil price outlook and analysis:
From the supply side, there are still concerns that OPEC won’t raise its oil production quota, despite the signals given by Saudi Arabia that it will increase its oil production. This uncertainty is likely to keep crude oil prices high.
From the demand side, the recent economic indicators show that major economies including U.S, Japan and China aren’t growing as they did earlier this year. This might ease the advances of crude oil prices and may even push crude oil prices down.
Therefore, in the short term, these forces may push crude oil prices in different directions and we may see sharp falls that will follow with rises, but in the mid term the lack in supply may prevail and keep oil prices high. Furthermore, the rising gap between Brent oil and WTI oil might indicate that the European oil market is further tightening and which might be stemmed from the oil shortage from Libya.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – US Core CPI and CPI
14:00 – TIC Purchases for April 2011
15:30 – EIA report about Crude oil inventories
10:00 – Euro Area CPI and core monthly inflation (May)
13:30 – U.S. Building Permits
13:30 – Department of Labor report – U.S. unemployment claims
15:30 – EIA report about Natural gas storage
For further reading: