Oil prices started August with very sharp falls, the steepest declines since May 5th back when the US dollar strongly appreciated against the Euro. The recent drop in crude oil prices is related, in part, to the sharp falls in US Stock markets, the appreciation of US dollar and the concerns of US economy’s economic stability and credit rating; the US eventually lost its AAA credit rating over the weekend despite managing to raise the US debt ceiling earlier last week. By the end of the week, Brent oil price lost 5.68% of its value, and WTI declined by 8.53%, resulting in the spread between Brent and WTI reaching $22.88/b on Friday.
By: Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.
Let’s review the changes during last week (August 1st to August 5th) in the oil market:
Oil prices – highlights
WTI declined during last week by 8.53%; its weekly average price fell by 7.14% as it reached $90.84 per barrel, compared with last week’s $97.83 per barrel. The average daily per cent change of WTI was -1.89%.
NYMEX Futures Price (September delivery) declined by 8.44% during the week, and reached $86.88/b on Friday, August 5th– the lowest price level since February 21st back when the turmoil in Libya just started.
Brent also declined by 5.68% during the week, and the average price fell by 4.42% compared with previous week’s average.
The difference between the Brent and WTI moderately inclined during the week and averaged at $21.65; it finished the week at $22.88.
The high gap between Brent and WTI continues to suggest that the European oil market is still tighter than in the U.S. oil market.
WTI and Brent declined during most of the week except on Friday when both of these energy prices inclined, probably due to the news of improved figures in the recent US labour report. On Thursday, there was a very sharp fall mainly to WTI.
Oil Stocks –highlights:
For the week ending on July 29th according to the recent EIA report of the US oil market, the U.S. oil stocks changed directions and declined during last week by 1.94 million barrels and reached 1,807 million barrels.
For further reading: Oil Prices – Daily Outlook August 5