Crude oil prices continue to zigzag as they did in the past couple of weeks. Today, the U.S. consumer confidence report will be published along with the U.S. new home sales. Here’s a short analysis and outlook of the crude oil market for today, July 26th:
Crude oil prices – July 2011
On Monday, July 25th crude oil price (WTI) fell by 0.67% to $98.97/b; during July WTI spot oil inclined by 3.85%.
Brent oil price also fell 0.71% to $117.45/b; during July Brent oil rose by 5.14%.
The chart below shows WTI spot oil and Brent oil price during May to July. It shows the “no trend” direction of crude oil prices in recent weeks, despite the sharp rise they have had during the first week of July.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil keeps on falling as WTI spot oil price is moderately outperforming Brent oil prices in recent weeks; on Monday July 25th the premium reached $18.48/b – its lowest level since July 6th; that being said, during July this premium rose by 12.61%, mainly because Brent oil price outperformed WTI spot oil price during the first week of July.
U.S. consumer confidence:
In the recent June report, the consumer confidence index declined compared with May’s index. Historically, this report had some significant positive affect on crude oil prices, i.e. as the consumer confidence index inclined so did crude oil prices (with U.S. dollar control). Last month, however crude oil prices rose very sharply due to other news items and thus this index had little effect on them.
The current expectations are that this index may drop again.
World News related to Oil market
- Saudi Arabia will sell an additional 3 million barrels of crude oil for August due to lose in oil shipment from Iran over payment dispute.
- China Petroleum and Chemical Corporation produced a total of 156.93 million tonnes of crude oil during the first half of 2011, which is a drop of 5.98% (Y-2-Y);
- BP Reported a $5.3 billion profit in the second quarter of 2011;
- Egypt wished to get out of the natural gas contact it has with Israel due to its claims that Israel pays below market price for natural gas;
- Iran’s natural gas production to double from 600 million cubic meters of gas per day to 1.2 billion cm/d;
- Iran’s export of natural gas to Europe will continue to be sustainable.
US dollar / Crude oil prices – July update
On Monday, Euro to US dollar exchange rate rose by 0.13%; furthermore, the US dollar to Yen fell by 0.32% and US dollar to Canadian dollar moderately declined by 0.09%. This direction might continue over the concerns of raising the US debt ceiling (see here for further elaboration on the debt ceiling talks). If the US dollar will continue to depreciate against major currencies, it may strengthen crude oil and drive their prices up.
Current crude oil prices
Major crude oil prices are currently traded up in the European markets:
The Nymex crude oil price, short term futures (August 2011 delivery) is traded at $99.61 / barrel, a $0.41/b increase or 0.41%, as of 09:29*.
The Dated Brent spot oil price inclines by $0.26/b to $117.72/ barrel as of 09:29*.
Thus, the current premium of Brent over WTI is at $18.11/b.
Crude oil price outlook and analysis:
Crude oil prices continue to shift with no clear direction; in the short term, crude oil price are likely to remain near $97-$100 for WTI spot oil and $117-$118 for Brent oil.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
15.00 – U.S. consumer confidence
15:00 – U.S. new home sales
09.00 – Monetary developments in the euro area
13:30 – US Department of Commerce – Report on Durable Goods
15:30 – EIA report about Crude oil inventories
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.