Oil Prices – Daily Outlook August 17

Oil prices changed direction again and slightly fell yesterday despite their recent upward trend in recent week. The shift might be related, in part, to the recent fall in the stock market, including the S&P500. Today, the following reports will be published: the EIA oil stockpiles report; U.S. producer pride index; Euro AREA CPI; and Japanese trade balance.

On Tuesday, August 16th oil price (WTI) changed direction and fell by 1.4% to $86.65/b; Brent also slightly declined by 0.2% to $109.55/b; during August WTI declined by 9.44%; Brent fell by 5.5%.

 Premium of Brent over WTI

The premium of Brent over WTI slightly inclined on Tuesday August 16th to $22.90/b; during August this premium rose by 13.1%, mainly because WTI declined by a sharper rate than Brent did.

Today’s reports:

 US oil stocks will be published today

The US Energy Information Administration will publish today its weekly report on the U.S. oil market: according to the Bloomberg the U.S. oil stockpiles slightly inclined during last week by 1.75 million barrels, while U.S. gasoline stocks may have shrunk by 5.37 million barrels to 205.8 million barrels (See here the recent petroleum report).

US PPI – July 2011

This report presents the inflation rate from producers stand point. In the previous report regarding June, this index for finished goods declined by 0.4%, after a rise of 0.2% in May; in the last month, the index declined mainly due to the drop in energy prices by 2.8%; this index will serve as an indicator for tomorrow’s US core inflation rate for July. 

 Euro Area CPI – July 2011

In June 2011, the annual inflation rate was 2.7%, unchanged compared with May’s for Euro Area; the inflation rate is still above the target inflation of ECB. The expectations in the upcoming CPI report for July 2011 are a slight decline. This news might affect the Euro currency, ECB’s rate decision in the upcoming month and consequentially a small effect on major commodities prices including oil prices.

Oil price analysis:

Oil prices slightly fell yesterday, but the trend was upward in recent days. There is still uncertainty in the financial markets that could spark an additional drop in stock markets that will drag down oil prices. The disappointing GDP growth rate of Germany and Euro Area along with the US housing market have also might have contributed to the falls in oil prices yesterday.  These reports might curb the recent rises in oil prices and have them trade further down.  

 For further reading:

Oil prices Monthly outlook – August 2011

Weekly outlook for August 15-19


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