Oil prices remain high and show moderate changes as their volatility fell in the last couple of weeks. Let’s examine the main news items related to the energy market including the recent events in the Middle East and US that might affect the commodities markets.
Here are main news items for today, April 28th:
Crude oil prices during April
Up to yesterday, April 27th, WTI spot oil inclined by 4.84%, and Brent oil rose by 5.93%. Yesterday, WTI and Brent oil moderately inclined.
As presented in the chart below, the current correlations of the daily percent changes between EURO/USD and oil prices (WTI and Brent) are still high and are at 0.568 for WTI oil and 0.412 for Brent oil. In the previous months there were low correlations but they have risen in during April, and could be that the depreciation of the USD compared to the EURO might coincide with the moderate rise in oil prices.
According to Bloomberg, US Federal Reserve officials stated that the Fed will complete its stimulus plan of 600 billion USD bond purchasing by June and will maintain the current low interest rates level.
Ben Bernanke is set to talk tomorrow about Community Development in Challenging Times. He will probably also update about the progress of the Fed’s stimulus plan.
The Department of Labor will publish today the US employment claims report. During the week ending on April 16th, initial claims decreased by 13,000, to reach 403,000claims; and the insured unemployment rate remained unchanged at 2.9% for the week ending on April 9th.
US Petroleum stocks rose last week
In the recent EIA weekly report on U.S. petroleum stocks increased by 2.9 million barrels, which is a 0.17% incline compared to the previous week. For the week ending on April 22nd the stocks reached 1,760.1 million barrels. This was the largest injection since March 25th, 2011 (For the complete U.S. petroleum review, see here).
Libyan war – update
According to the Guardian, Gaddafi is arming 17 year olds against the NATO military intervention.
Libya has the largest oil reserves in Africa, and used to have one of the highest oil production rates in Africa at nearly 1.6 million bbl/d before the war began back in February 2011. Libya’s oil production is still low and is estimated at nearly 0.4 million bbl/d.
Violent confrontations in Syria – update
At least 400 people died during the violent confrontations between the Syrian army and civilian protestors against the current regime and current President of Syria Bashar al-Assad, during the last several days.
As a protesting measure, over 200 members of the ruling Baath party resigned because of the violent protests.
Progress in Yemen
Following the announcement that President Ali Abdullah Saleh is step down from his Presidency within a month in exchange for immunity against any future prosecution, the opposition may accept Saleh’s condition. Currently there are still reports of violence and killing of protestors.
Current crude oil prices
Major oil prices are currently traded in the European markets with mixed trends:
The Nymex crude oil price, short term futures (May 2011 delivery) is traded at 113.23 USD / barrel, a 0.47 USD/b increase or 0.42%, as of 08.42*.
The Dated Brent spot crude oil declines by 0.07$/b and it is at 125.59 USD / barrel as of 08.52*.
Thus, the current premium of Brent over WTI is at 12.36$/b.
Crude Oil price outlook and analysis:
Crude oil prices moderately inclined yesterday but the big picture remains of oil prices change with no clear trend. The events in the Middle East keep on having little to no effect on the commodities markets for now, and oil prices are still high and already incorporate most of the uncertainty that is attributed to the instability in the Middle East
Therefore I still speculate that WTI oil price will continue to increase but very moderately along with Brent oil; Furthermore, crude oil prices might remain at a high level, but in the mid to long term will eventually come down, once the uncertainty around the supply of oil will dissipate.
Difference between Brent oil and WTI spread: as of yesterday, April 27th, the premium of Brent oil over WTI rose to 12.91$/b.
The premium of Brent oil over WTI stopped its descent in the last couple of days and remained around the 11-12 USD. For now I speculate that the premium might continue to moderately decline but will remain around a double figure gap ranging between 10 and 13 USD for the rest of the week.
13.30 – Department of Labor report – US unemployment claims
15.30 – EIA report about Natural gas storage
09.00 – Monetary developments in the euro area
13:30– Canada GDP by industry
17.30 – Ben Bernanke, Chairman of Fed, speaks
For further reading (in this site):
- Weekly outlook for April 25-29
- Oil prices continued their rally during the week – 18-21 April
- Petroleum stocks keep on falling – EIA review April 21