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Guest Commentary: Oil Prices – Daily Outlook 09.30.2011

Guest Commentary: Oil Prices – Daily Outlook 09.30.2011

2011-09-30 14:10:00
Lior Cohen, Energy Analyst for Trading NRG,

Oil Prices – Daily Outlook September 30

Oil prices are likely to end the week slightly recovering from the sharp falls they have endured last week. Oil along with the US stock market rose during most of the week. Today, the Euro Area Annual Inflation report will be published, and Canada GDP report for July 2011.

On Thursday, September 29th oil price (WTI) slightly increased by 1.15% to $82.14/b; Brent also inclined by 1.18% to $106.44/b; during September WTI fell by 7.51%; Brent decreased by 8.62%.

The chart below shows the prices development of WTI and Brent oil in the past three months - July up to September.

Guest_Commentary_Oil_Prices_Daily_Outlook_09.30.2011_body_Crude_oil_price_September_30.png, Guest Commentary: Oil Prices – Daily Outlook 09.30.2011

The premium of Brent over WTI slightly inclined on Thursday to $24.30. During September, this premium declined by 12.18%.

Guest_Commentary_Oil_Prices_Daily_Outlook_09.30.2011_body_Difference_Brent_and_WTI_September_30.png, Guest Commentary: Oil Prices – Daily Outlook 09.30.2011

On Today's Agenda:

Euro Area Annual Inflation:the inflation in Euro Area remained unchanged in August with an annual inflation rate of 2.5%; if the upcoming flash estimate won't show an increase in the inflation rate, it may affect the EURO/USD and consequently affect oil;

Canada GDP: This report will present the changes in major industrial sectors for July 2011. In the previous report regarding June 2011, the real gross domestic product slightly inclined by 0.2%,. The news of this report could affect CAD and consequently affect oil prices.

U.S. Oil Stockpiles Rose by 1.1 Million Bbl

According to the recent EIA report, U.S. Petroleum and crude oil stockpiles bounced back last week by 1.1 million barrels to 1,775.1 million barrels; this shift came after an eight consecutive week rise in stockpiles.

The chart below shows the petroleum stockpiles levels compared to the WTI price during 2011.

Guest_Commentary_Oil_Prices_Daily_Outlook_09.30.2011_body_Stocks_Oil_and__oil_price_September_30.png, Guest Commentary: Oil Prices – Daily Outlook 09.30.2011

Forex Market and Oil– September Update

The Euro/USD exchange rate slightly inclined on Thursday by 0.41%; during September the Euro/USD completed a 5.37% decrease. The USD also depreciated yesterday against the AUD, which is historically strongly related to daily percent changes in oil prices. If USD will continue to depreciate against the Euro and AUD, they may help oil prices to increase.

U.S. Stock Market / Oil– September Update

The S&P500 inclined on Thursday by 0.81%. During September, the S&P500 decreased by 4.80%. During September, there was a strong positive correlation between oil prices and S&P500 (e.g. for WTI it was 0.638 and for Brent it was 0.519). If the US stock markets will continue to rise as they did in the past few days, they may further affect oil prices to incline.

Oil Prices Outlook:

Oil prices regained back some of the losses they had endured during last week. Oil prices' slow recovery coincided with the US stock markets comeback. The cautious optimism regarding European policymakers approving the new bailout plan may keep fueling the market gains during the day; the decrease in the USD against major currencies also helps oil prices recover. I speculate that WTI will remain around $80-$85 and Brent around $105-$110 to end September.

For further reading:

Oil prices Monthly outlook – September 2011

Weekly Outlook for September 26-30

Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.

By: Lior Cohen, Energy Analyst for Trading NRG

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