Guest Commentary: Oil Prices – Daily Outlook 09.13.2011
Oil Prices – Daily Outlook September 13
Oil prices changed direction along with the US stock markets and ended yesterday with light gains. The slight fall of the USD against major currencies such as Euro and CAD also provided some backwind for crude oil prices' bounce back. Bloomberg added this morning to the speculation around a Greek debt default as it claimed that the chances of a Greece default within the next five years has risen to 98%. But the markets are currently much calmer than yesterday, as traders seeking more substantial inflation than just pure speculations around the debt crisis in Europe. Today, the US Federal Budget balance report will be published, the monthly IEA report on global oil market, the US import prices and the Australian housing starts.
On Monday, September 12th oil price (WTI) inclined by 1.09% to $88.19/b; Brent also slightly inclined by 0.23% to $112.50/b; during September WTI declined by 0.70%; Brent fell by 3.42%.
The chart below shows the prices of WTI and Brent during July up to date.
The premium of Brent over WTI continues to drop from the high levels it was at the beginning of September. The premium reached on Monday $24.31. During September, this premium fell by 12.14%.
OPEC monthly report
According to the recent monthly report of OPEC, the OPEC's oil production slightly inclined by 76 thousand bbl/d during August to 29,920 thousand bbl/d compared with 29,844 thousand bbl/d in July. It is stated that the Libyan oil production is expected to resume in the next few days and should reach 1 million bbl/d in within six months.
On Today's Agenda:
US Federal Budget Balance: this report will present the changes in the US federal balance for August 2011; this report indicates the government debt growth and thus may affect the USD and consequently oil trading.
IEA monthly report: today, the IEA monthly report will be published and will present the main changes in the expected global demand for crude oil in 2011 and 2012.
S&P500 / oil prices – September update
The S&P500 started the week with a moderate increase of 0.70%. During September, the S&P500 declined by 4.65%. Furthermore, in September the correlation between oil prices and S&P500 was 0.910 for Brent and 0.975 for WTI. If the US stock markets will continue to trade up, it may reflect in rises in oil prices as well.
Oil price outlook:
The US stock market indexes bounced back on Monday, while the USD traded down against Euro and CAD. Oil prices followed and slightly inclined as well. It is also expected that Brent will trade down compared with WTI resulting in reducing the gap between Brent and WTI, because it's expected that European oil market will loosen. In the near future, I still think WTI will remain around $85-$90 mark and Brent around $108-$112, but during the rest of September oil prices are likely to moderately decline.
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.
By: Lior Cohen, Energy Analyst for Trading NRG
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.