Crude oil prices declined yesterday: the WTI spot oil price declined by 2.22%; this was the sharpest daily percent change it had since July 14th. Yesterday, the EIA petroleum stocks was published and presented a sharp increase in stockpiles of 9.16 million bbl. Today, the U.S. unemployment claims report will be published, EIA natural gas market report, and the US pending home sales.
Here’s a short analysis and outlook of the crude oil market for today, July 28th:
Crude oil prices – July 2011
On Wednesday, July 27th crude oil price (WTI) sharply declined by 2.22% to $97.40/b; during July WTI spot oil inclined by 2.2%.
Brent oil price also fell 0.87% to $117.11/b; during July Brent oil rose by 4.83%.
The chart below presents the normalized prices of WTI spot oil and Brent oil during July (June 30th=100). It shows the shift in the “no trend” mode of WTI spot oil in recent days as it fell very sharply yesterday. This might be stem, in part from the recent EIA petroleum report that showed a sharp increase in US stockpiles.
Premium of Brent oil over WTI spot oil
The premium of Brent oil over WTI spot oil bounced back yesterday and on Wednesday July 27th the premium reached $19.71/b – the highest level since July 21st; during July this premium rose by 20.11%, mainly because Brent oil price outperformed WTI spot oil price at the first week of July.
U.S. Petroleum stocks – rose by 9.16 million bbl
The US Energy Information Administration published its weekly report on U.S. petroleum stocks: according to the report the U.S. crude oil stocks sharply inclined last week (for the week ending on July 22nd) by 9.16 million barrels and reached 1,809 million barrels – the highest stockpiles since December 10th, 2010. This sharp increase in the stockpiles was probably driven by the increase in crude oil imports (See here the recent petroleum report).
The chart below shows the upward trend since the end of April of petroleum and oil stocks and the WTI crude oil prices during 2010- 2011.
US dollar / S&P500/ Crude oil prices – July update
On Wednesday, Euro to US dollar exchange rate fell by 0.99%; on the other hand, the Australian dollar to US dollar fell by 0.57%; the US dollar to Canadian dollar inclined by 0.58%. This means that US dollar bounced back against the Euro and CAD, but fell against the AUD. The U.S. debt ceiling concerns continue to stir up the financial news, but they seem to have the strongest effect on the stock markets (S&P500); in the chart below, the S&P500 index (normalized to June 30=100) dropped very precipitately in recent days well below the initial price level, while crude oil prices also declined in recent days, but they still inclined in July.
Current crude oil prices
Major crude oil prices are currently traded up in the European market:
The Nymex crude oil price, short term futures (August 2011 delivery) is traded at $97.73 / barrel, a $0.33/b increase or 0.34%, as of 09:30*.
The Dated Brent spot oil price inclines by $0.89/b to $118.00/ barrel as of 09:41*.
Thus, the current premium of Brent over WTI is at $20.27/b.
Crude oil price outlook and analysis:
Crude oil prices continue to seek 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):
13:30 – Department of Labor report – U.S. unemployment claims
15:00 – U.S. pending home sales
15:30 – EIA report about Natural gas storage
10.00 – Euro Area annual inflation (July)
13:30 – Canada GDP by industry
13.30 – Bureau of Economic Analysis – US second quarter advance GDP
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.