Oil prices continue to seek direction after their rapid rise at the beginning of July. Despite the concerns from Europe about the debt of Greece and Portugal, and the US debt ceiling debate, oil prices remain high at the 95-100 dollar mark. Today, the US TIC long term purchases report will be published; the Australian bank will make its decision on the overnight rate.
Here’s a short analysis and outlook of the crude oil market for today, July 18th:
Oil prices – July 2011
On Friday, July 15th crude oil price (WTI) rose by 1.62% to $97.24/b; during July WTI inclined by 2.89%.
Brent also rose by 0.71% to $117.72/b; during July Brent rose by 5.38%.
The chart below shows the changes of WTI and Brent during July, in which they are both normalized to 100=30 of June.
US debt ceiling concerns
The US will need to decide on raising the debt ceiling by the beginning of August; it’s mostly likely to be passed in the next couple of weeks, but in the mean time the internet continues to explore this issue. Moody’s rating agency even went one step further and suggested the United States to eliminate its statutory limit on government debt in order to reduce uncertainty among bond holders.
Euro/USD and oil prices – July update
During July the Euro/ USD exchange rate fell by 2.4% probably over the debt concerns of the European market news about Moody’s rating and Bernanke’s speech. During June, the EURO/USD exchange rate was highly correlated with the daily per cent changes of oil prices. This might suggest that the EURO/USD rise might have coincided with the recent added value to oil prices.
Oil price outlook:
Oil prices continue to seek direction, despite their sharp rises at he beginning of July; they might continue to moderately change throughout the rest of the week over the currency effect of the changes in US dollar and Euro. There are still fundamental factors to keep oil prices high including the expected growth in demand, and the uncertainty over the supply from OPEC.
For further reading: Oil prices Monthly outlook –July 2011
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.