Guest Commentary: Oil Prices Daily Outlook 06.08.2011

Oil Prices Daily Outlook 8 June

Oil prices continue to fluctuate very moderately, despite the ongoing turmoil in the Middle East; OPEC meeting is being held today and EIA will publish its weekly oil report on oil stockpiles, consumption and production in the US. Let's review and analyze the oil market for today, June 8th:

Oil Prices – June 2011

Yesterday, June 7th, oil price (WTI) moderately inclined to $99.09 – a 0.08% increase; during June so far the WTI decreased by 3.52%.

Brent price also increased by 2.33%, and it reached $116.68; during June Brent declined by 0.43%.

As in the chart below, following the sharp falls of oil prices at the first few days of May, they have remained nearly unchanged during most of May and June up to date.

The premium of Brent oil over WTI started to puck up in recent weeks and rose by 21.48% in June as it reached on Tuesday, June 7th $17.59/b.

The chart below shows the changes of this premium during May and June 2011.

Today's OPEC meeting

Today in Vienna Austria will be held an OPEC meeting that will revolve around whether or not OPEC will raise its reported oil production.

During 2011 oil prices inclined sharply; some of the reasons include the rise in global demand for oil ,and the decline of OPEC's crude oil output in recent months due to the decline in Libyan oil production;

According to recent news from Bloomberg, OPEC is expected to raise its oil production in 2011. If this will be the case, it's expected that oil prices may decline.

Saudi Arabia is pushing to raise OPEC's production; however Iran and Venezuela lead the charge not to raise OPEC's oil production quota.

Petroleum Stocks in the US

The US Energy Information Administration will publish today (instead of yesterday) its weekly report on U.S. oil: Bloomberg estimates that U.S. oil stocks dropped by 1.05 million barrels during last week. In the previous U.S. Petroleum report, the stocks rose during last week by 7.2 million barrels or by 0.41% (See here the recent petroleum report).

U.S. Economy

The Chairman of the Federal Reserve gave a speech yesterday today on the U.S. economy's economic outlook. He referred to the Fed's monetary policy and the rising commodities prices in the world (see here for more on this subject).

It's still not clear what will be the Fed's next move once the stimulus plan will end this month, but at the current slow progress of the US economy in 2011, the Fed might consider an additional stimulus plan to jump start the US economy.

Oil Price Outlook and Analysis:

Oil prices continue to demonstrate moderate fluctuations as the financial markets are still seeking direction for oil prices.

Due to the slowdown in the US and parts in Europe on the one hand, and the expected rise in OPEC's crude oil quota, these factors might help bring down current crude oil prices within several weeks, unless there will be a new event that will stir up the financial markets

In the mean time, I still speculate that in the short term oil prices will remain at their current high prices around $100 per barrel for WTI and $115 for Brent oil.

Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):

Today

15:30 – EIA report about Crude oil inventories

Tomorrow

13:30 –Canadian Trade balance

13.30 – Report on American Trade balance

13.30 – ECB conference rate decision

13.30 – Department of Labor report – U.S. unemployment claims

15.30 – EIA report about Natural gas storage

For further reading:Weekly outlook for June 6 – 10

By: Lior Cohen, Energy Analyst for Trading NRG