Oil Prices – Daily Outlook September 21

Oil prices changed direction and slightly inclined yesterday. The depreciation of USD against major currencies such as Euro, AUD and CAD might be among the factors that affected oil prices to trade up yesterday. Today, the EIA oil report will be published along with the Canadian Core CPI and the U.S. existing home sales report for August. The FOMC will announce today its decision about its next step in helping jump start the US economy.

On Tuesday, September 20th oil price (WTI) inclined by 1.39% to $86.89/b; Brent also rose by 0.39% to $112.05/b; during September WTI fell by 2.16%; Brent decreased by 3.80%.

Forex Market and Oil Prices – September Update

The Euro/USD exchange rate slightly inclined on Tuesday by 0.12%; during September the Euro/USD completed a 4.64% decrease. The appreciation of USD against the Euro and AUD seems connected with the changes of major commodities prices including oil prices. If this trend will continue, in which the USD is trade up, it may also affect oil prices to trade down.

US Oil Report to be published today

The US Energy Information Administration will publish today its weekly report on the U.S. petroleum market: according to Bloomberg, U.S. oil stockpiles inclined by 2.57 million barrels. In the last report, for the week ending on September 9th oil stocks declined report by 5.6 million barrels and reached 1,779.2 million barrels.

On Today’s Agenda:

FOMC Meeting: the two day session of the Federal Open Market Committee will be concluded today; the FOMC is expected to announce it will issue a new stimulus plan. If the FOMC will decide today to issue a stimulus plan it could have an effect on commodities market including crude oil.

U.S. existing home sales: Following yesterday’s report on the housing starts, today the report about US existing home sales will provide another indicator of the housing market. In the recent report reading July there was a drop in number of homes sold (see here the recent housing review);

US Housing Starts Declined in August

During August 2011 there was an increase in building permits, but there was a drop in housing starts. Privately owned housing starts fell in August 2011 by 5.0%; the annual rate in August is still 5.8% below the rate in August 2010. This news doesn’t look well for the progress of the housing market in the United States and consequently may reflect in a slowdown in US economy that could also affect its demand for oil. 

Oil Prices Outlook:

Oil prices kept zigzagging yesterday as they have been doing during September. The rally of the US stock markets in recent weeks may have helped oil prices to remain high, while the ongoing concerns of a global slowdown as suggested by the recent report of the IMF are likely to pressure oil prices to trade down, resulting in opposing forces that drag oil prices, as other commodities prices, to different directions. Today’s US housing report and the FOMC meeting decision might affect trading: if the FOMC will come up with a stimulus plan or will surprise traders with an unexpected QE plan this might sharply affect oil prices to trade up. On the other hand, another negative housing report might further affect stock markets and even oil prices to trade down. 

For further reading:

Oil prices Monthly outlook – September 2011

Weekly Outlook for September 19-23

 

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

 


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