Oil Weekly Outlook

[Samirofi]

Oil Weekly Outlook for January 13-17

Oil price (WTI) decreased by 1.32% during last week. Conversely, the price of Brent oil edged up by 0.34%. As a result, the gap of Brent oil over WTI widened: The premium ranged between $13.30 and $14.73. Last week, the EIA’s weekly report showed a rise in oil’s stockpiles of 3 million barrels – first gain in eleven weeks. Will oil continue to fall? This week, several reports may affect oil prices. These items include: OPEC monthly update, China new loans, U.S Philly fed index, U.S retail sales, and EIA oil weekly update.


Here is a weekly forecast for the oil market for January 13^th to 17^th:


Oil Prices – January Overview


During last week, crude oil price (WTI) declined by 1.32% and reached by Friday $92.72/b; on the other hand, Brent oil inched up by 0.34% to $107.25/b;


In the chart below are the daily changes in WTI and Brent oil prices during the past several months (prices are normalized to January 31^st). As seen below, Brent and WTI oil prices declined in the past month.



Premium of Brent over WTI – January


The difference between Brent and WTI oilrose last week as it ranged between $13.30 and $14.73 per barrel. During the week, the premium increased by $1.60 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles changed course and rose by 3 MB and reached 1,752.9 million barrels. The linear correlation between the shifts in stockpiles has remained stable at -0.198: this correlation suggests that oil price, assuming all things equal, may decline next week. But in order to better understand the fundamentals let’s examine the developments in supply and demand:


Supply: Oil imports spiked by 3.7% last week. Further, oil production inched up by 0.2%; the total supply increased by 1.9%;


Demand: Refinery inputs remained unchanged last week. In total, the demand was still higher than the supply. But due to no change in demand and rise in supply, the gap between supply and demand narrowed. This difference may drag down oil prices as the U.S oil market loosens.


The chart below shows the developments in the difference between supply and demand and the price of oil.



If U.S oil market further loosens, this could drag down oil price.

The next weekly update will be released on Wednesday, January 15^thand will pertain to the week ending on January 10^th.


OPEC Monthly Report


The OPEC report will present the main developments in crude oil and natural gas’s supply and demand worldwide; the report will also pertain to the shifts in the production of OPEC countries during December 2013; this news may affect oil prices).


The next report will be published on Wednesday, January 15^th.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Tuesday –EU Industrial Production: As of November, the production fell by 1.1%; this report may affect the Euro currency;


Tuesday –U.S. Retail Sales Report: This monthly report refers to December; in the last report regarding November, retail sales slightly rose by 0.7% (month-over-month); core retail sales rose by 0.4%; this report also shows the changes in U.S’s gasoline retail sales, which could suggest the developments in demand for gasoline;


Thursday – Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the previous survey regarding December, the growth rate slightly rose from +7 in November to +7 in December. If the index further declines, it may adversely affect oil price (the recent Philly Fed review);


Oil Forecast and Breakdown


From the supply side, the sharp rise in imports and moderate gain in production is likely to pressure down oil prices. In total, the supply expanded last week. From the demand side, refinery inputs remained flat. As a result, the storage rose for the first time in eleven weeks. Further, the gap between supply and demand has narrowed, albeit the demand remains higher than the supply; this could suggest the oil market has loosened. Looking forward, the upcoming reports regarding U.S and Europe could offer some additional insight regarding the developments in oil demand in these countries. The difference between Brent and WTI ranged between $13 and $14. The slightly looser oil market in the U.S is likely to widen the gap between WTI and Brent oil. On the other hand, if the US dollar continues to weaken, this could pull up oil prices.


The bottom line, on a weekly scale, I guess oil price may continue to fall and the gap between WTI and Brent further widen.

[Samirofi]

Oil Outlook for January 20-24

Oil price (WTI) bounced back and increased by 1.78% during last week. Conversely, the price of Brent oil edged down by 0.18%. As a result, the gap of Brent oil over WTI narrowed: The premium ranged between $12.69 and $14.95. Last week, the EIA’s weekly update showed a drop in oil’s stockpiles of over 10 million barrels – the sharp drop in oil imports contributed to the fall in oil stockpiles. Will oil continue to rally? This week, several reports may affect oil prices. These items include: U.S and Chinas flash manufacturing PMI, China’s GDP, IEA monthly update, U.S existing home sales, and EIA oil weekly report.


Here is a weekly forecast for the oil market for January 20^th to 24^th:


Oil Prices – January Overview


During last week, crude oil price (WTI) rose by 1.78% and reached by Friday $94.37/b; on the other hand, Brent oil inched down by 0.18% to $107.06/b;


In the chart below are the daily shifts in WTI and Brent oil prices during the past several months (prices are normalized to January 31^st). As seen below, Brent and WTI oil prices decreased during January.



Premium of Brent over WTI – January


The difference between Brent and WTI oilrose last week as it ranged between $12.69 and $14.95 per barrel. During the week, the premium decreased by $1.84 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles changed course and fell by 10.2 MB and reached 1,742.6 million barrels. The linear correlation between the developments in stockpiles has remained stable at -0.2: this correlation suggests that oil price, assuming all things equal, may continue to rise next week. But in order to better understand the fundamentals let’s analyze the developments in supply and demand:


Supply: Oil imports plummeted by 2.7% last week. Conversely, oil production inched up by 0.3%; the total supply decreased by 1.2%;


Demand: Refinery inputs slipped by 0.3% last week. In total, the demand was still higher than the supply. Moreover, due to little decline in demand and sharp fall in supply, the gap between supply and demand widened. This wider gap may pressure up oil prices as the U.S oil market tightens.


The chart below shows the developments in the difference between supply and demand and the price of oil.



If U.S oil market further tightens, this could continue to pull up oil price.


The next weekly report will be released on Wednesday, January 23^rd and will pertain to the week ending on January 18^th.


OPEC’s Oil production continues to fall


The OPEC report came out last week and showed OPEC’s oil production remained nearly unchanged during last month: OPEC’s production during December reached 29.443 million bbl/d – a 20 thousand bbl/d slip. This modest decline in production is mostly due to Iraq, Venezuela and Saudi Arabia. Libya’s oil production remains low at 261 thousand bbl/d – nearly one fifth of its normal capacity. OPEC’s oil production during December was around 5% lower than the average during 2012. If this low production remains, this could continue to pressure up oil prices mainly Brent oil.


IEA Monthly Report


This upcoming monthly report will present an updated (for December) outlook and analysis for the global crude oil and natural gas market for 2013 and 2014.


The next report will be published on Tuesday, January 21^st.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Monday –China Fourth Quarter GDP 2013: In the third quarter of 2013, China grew by 7.8% in annual terms; China’s economy grew by 7.5% in the second quarter of 2013. The current expectations are that the fourth quarter of 2013 grew in annul terms by a similar rate to the previous quarter;


Wednesday – China Manufacturing PMI (flash): HSBC will publish its flash manufacturing PMI survey for January. Last month’s report regarding December 2013 the Manufacturing PMI inched up to 50.5 – i.e. China’s manufacturing sectors is growing but at a slightly slower pace prices;


Thursday –U.S flash manufacturing PMI: This report will show a flash of the monthly changes in the manufacturing sectors during January; as of December, the manufacturing PMI inched up to an index of 54.4;


Oil Outlook and Breakdown


From the supply, the sharp drop in imports and moderate rise in production is likely to pressure up oil prices. In total, the supply contracted last week. From the demand, refinery inputs slightly fell As a result, the storage fell for eleventh time in twelve weeks. Further, the difference between supply and demand has expanded, as the demand remains higher than the supply; this could suggest the oil market has tightened. Looking forward, the upcoming reports regarding U.S and China could offer some additional insight regarding the developments in oil demand in these countries. The difference between Brent and WTI ranged between $12 and $14. The slightly tighter oil market in the U.S is likely to narrow the gap between WTI and Brent oil. Conversely, if the US dollar continues to strengthen, this could pull down oil prices.


The bottom line, on a weekly scale, I guess oil price may continue to slowly rise and the gap between WTI and Brent to remain stable.

[Samirofi]

Oil Outlook for January 27-31

Oil price (WTI and Brent) rallied again during last week. WTI oil and Brent oil rose by 2.41% and 0.77%, respectively. As a result, the gap of Brent oil over WTI narrowed: The premium ranged between $12.69 and $10.26. Last week, the EIA’s weekly update showed a decline in oil’s stockpiles of 4 million barrels. Will oil continue to rise? This week, several reports may affect oil prices. These items include: U.S GDP, China’s manufacturing PMI, U.S core durable goods, and EIA oil weekly report.


Here is a weekly forecast for the oil market for January 27^th to 31^st:


Oil Prices – January Overview


During last week, crude oil price (WTI) rose by 2.41% and reached by Friday $96.64/b; moreover, Brent oil increased by 0.77% to $107.88/b;


In the chart below are the daily changes in WTI and Brent oil prices during the past several months (prices are normalized to January 31^st). As seen below, Brent and WTI oil prices rallied during recent week.



Premium of Brent over WTI – January


The gap between Brent and WTI oilrose last week as it ranged between $12.69 and $10.26 per barrel. During the week, the premium decreased by $1.45 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles fell again by 4 MB and reached 1,738.7 million barrels. The linear correlation between the developments in stockpiles has remained stable at -0.194: this correlation suggests that oil price, assuming all things equal, may continue to rally next week. But in order to better understand the fundamentals let’s analyze the developments in supply and demand:


Supply: Oil imports remained unchanged last week. Conversely, oil production inched down by 0.2%; the total supply decreased by 0.1%;


Demand: Refinery inputs fell by 1.6% last week. In total, the demand was still higher than the supply. Moreover, due to sharp drop in demand and little fall in supply, the gap between supply and demand narrowed. This narrower gap may drag down oil prices as the U.S oil market loosened.


The chart below shows the changes in the difference between supply and demand and the price of oil.



If U.S oil market further loosens, this could pull down oil price


The next weekly report will be released on Wednesday, January 30^th and will pertain to the week ending on January 24^th.


IEA’s Update as of January 2014


According to the recent report, OECD’s industry oil inventories tumbled down by 53.6 mb during November. The outlook for global oil refinery was raised by 110 tb /d to reach 76.8 mb/d. Global oil supplies edged down by 25 tb /d month-over-month to 92.23 mb/d during December. The global demand for 4Q13 was raised by 135 tb /d due to unexpectedly strong US deliveries, partly offset by curtailments in China and other countries.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Tuesday – U.S Core Durable Goods: As of November 2013, new orders of manufactured durable goods rose to $497.9 billion; if this report shows another rise in new orders, then it could pull up oil prices;


Thursday – First U.S GDP 4Q 2013 Estimate: This will be the first estimate of U.S’s fourth quarter 2013 real GDP growth. In the previous estimate the U.S GDP rose by 4.1% in the third quarter of 2013 (it was revised up);


Friday – China Manufacturing PMI: As of December, the Manufacturing PMI slipped to 51 – i.e. China’s manufacturing sectors are expanding at a slower pace. If in the upcoming report the PMI falls again, it could signal slowdown in the growth rate in China’s manufacturing sectors, which could also negatively affect oil;


Oil Outlook and Breakdown


From the supply, the modest decline production and stable oil imports resulted in a slight decline in oil supply, which could have little effect on the price of oil. From the demand, refinery inputs sharply fell. Nonetheless, the storage declined again for twelve out of the past thirteen weeks. Further, the difference between supply and demand has expanded, as the demand remains higher than the supply; this could suggest the oil market has tightened. Looking forward, the forthcoming reports regarding U.S and China could offer some additional insight regarding the progress in the demand for oil in these countries. The gap between Brent and WTI ranged between $10 and $12. The slightly looser oil market in the U.S is likely to widen the gap between WTI and Brent oil. Conversely, if the US dollar continues to weaken, this could pull up oil prices.


The bottom line, on a weekly scale, I guess oil price may change course and fall and the gap between WTI and Brent to slightly narrow.

[Samirofi]

Oil Outlook for February 3-7

Oil price (WTI) slightly rose again during last week, while Brent oil declined. WTI oil rose by 0.88%; Brent oil slipped by 1.37%. As a result, the gap of Brent oil over WTI narrowed: The premium ranged between $8.91 and $10.97. Last week, the EIA’s weekly update showed a drop in oil’s stockpiles of 3.8 million barrels. Will oil change direction? This week, several reports may affect oil prices. These items include: U.S NF payroll report, U.S manufacturing PMI, U.S factory orders, and EIA oil weekly report.


Here is a weekly forecast for the oil market for February 3^rd to 7^th:


Oil Prices – February Overview


During last week, crude oil price (WTI) rose by 0.9% and reached by Friday $97.49/b; conversely, Brent oil decreased by 1.37% to $106.40/b;


In the chart below are the daily shifts in WTI and Brent oil prices during the past several months (prices are normalized to January 31^st, 2013). As seen below, Brent and WTI oil prices didn’t do much in recent weeks.



Premium of Brent over WTI – February


The difference between Brent and WTI oilslipped last week as it ranged between $8.91 and $10.97 per barrel. During the week, the premium decreased by $2.33 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles declined again by 3.8 MB and reached 1,734.9 million barrels. The linear correlation between the developments in stockpiles has remained stable at -0.199: this correlation implies that oil price, assuming all things equal, may continue to advance next week. But in order to better understand the fundamentals let’s analyze the developments in supply and demand:


Supply: Oil imports rose by 1.6% last week. Conversely, oil production inched down by 0.2%; the total supply increased by 0.8%;


Demand: Refinery inputs declined by 1.3% last week. In total, the demand was lower than the supply – the first time since late November 2013. In other words, due to drop in demand and rise in supply, the gap between supply and demand changed course. This current gap may drag down oil prices as the U.S oil market is much looser than it was back in a few weeks back.


The chart below shows the changes in the gap between supply and demand and the price of oil.



If U.S oil market loosens further, this could drag down oil price.


The next weekly report will be released on Wednesday, February 5^th and will refer to the week ending on January 31^st.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Monday – U.S Manufacturing PMI: This report will refer to January 2014. In December, the index slipped to 57%; this means the manufacturing is growing at a slower pace; this index may affect crude oil markets;


Tuesday – U.S Factory Orders: This report will pertain to the developments in U.S. factory orders of manufactured durable goods during January; in the latest report factory orders increased by 1.8%; this report will offer some insight regarding the progress of the U.S economy;


Friday – U.S. Non-Farm Payroll Report: In the previous employment report regarding December 2013, the labor market modestly improved: The number of non-farm payroll employment increased by 74k – much lower than the number many had expected; the U.S unemployment rate dropped to 6.7%;


Oil Outlook and Breakdown


From the supply, the modest decline production was offset by the rise in imports; the result was a rise in oil supply. From the demand, refinery inputs declined again. Nonetheless, the storage fell again. Further, the difference between supply and demand has shifted so that the supply is higher than the demand; this could suggest the oil market has loosened. Looking forward, the upcoming reports regarding U.S could offer some additional insight regarding the progress in the demand for oil. The gap between Brent and WTI ranged between $9 and $10. The looser oil market in the U.S may widen the gap between WTI and Brent oil. Moreover, if the US dollar continues to strengthen, this could pull down oil prices.


The bottom line, on a weekly scale, I guess oil price may decline and the gap between WTI and Brent to slightly widen.

[Samirofi]

Oil Outlook for February 10-14


Oil price (WTI and Brent) rose again during last week. WTI oil rose by 2.5%; Brent oil, by 3%. As a result, the gap of Brent oil over WTI widen: The premium ranged between $8.59and $9.69. Last week, the EIA’s weekly update showed another decline in oil’s stockpiles of 5.3 million barrels. Will oil continue to rise? This week, several reports may affect oil prices. These items include: U.S retail sales, industrial production, China’s new loans, OPEC and IEA monthly updates, and EIA oil weekly report.


Here is a weekly forecast for the oil market for February 10^th to 14^th:


Oil Prices – February Overview


During last week, crude oil price (WTI) increased by 2.5% and reached by Friday $99.88/b; moreover, Brent oil rose by 3% to $109.57/b;


In the chart below are the daily changes in WTI and Brent oil prices during the past several months (prices are normalized to January 31^st, 2013). As you can see below, Brent and WTI oil prices rallied in recent weeks.



Premium of Brent over WTI – February


The gap between Brent and WTI oilslightlyrose last week as it ranged between $8.59 and $9.69 per barrel. During the week, the premium rose by $0.78 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles fell again by 5.3 MB and reached 1,729.6 million barrels. The linear correlation between the developments in stockpiles has remained stable at -0.201: this correlation suggests that oil price, assuming all things equal, may continue to rise next week. But in order to better understand the fundamentals let’s analyze the developments in supply and demand:


Supply: Oil imports tumbled down by 3.5% last week. Further, oil production inched down by 0.3%; the total supply decreased by 1.9%;


Demand: Refinery inputs declined by 1.7% last week. In total, the demand was still lower than the supply, but the gap between supply and demand contracted. This current gap may curb down oil prices from further rising as the U.S oil market is still looser than it was back in a few weeks back.


The chart below shows the changes in the gap between supply and demand and the price of oil.



If U.S oil market loosens further, this could drag down oil price.


The next weekly report will be released on Wednesday, February 12^th and will refer to the week ending on February 7^th.


OPEC Monthly Update


The OPEC report will present the main developments in crude oil and natural gas’s supply and demand worldwide; the report will also refer to the shifts in the production of OPEC countries during January 2014; this news may affect oil prices.


The next report will be published on Wednesday, February 12^th.


IEA Monthly Update


This upcoming monthly report will present an updated (for January) forecast and analysis for the global crude oil and natural gas market for 2013and 2014.


The next report will be published on Thursday, February 13^th.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Monday – China’s Trade Balance: According to the recent monthly report, China’s trade balance fell to a $25.6 billion surplus; if the surplus further falls, it could indicate China’s economy isn’t improving and thus may negatively affect oil prices;
Thursday –U.S. Retail Sales Report: This monthly update refers to January; in the last report regarding December, retail sales slightly rose by 0.2% (month-over-month); core retail sales rose by 0.7%; this report also shows the changes in U.S’s gasoline retail sales, which could suggest the developments in demand for gasoline;
Friday –U.S Industrial Production: This report will show the monthly shifts in the U.S industrial production during January; as of December, the production inched up by 0.3%; this report may affect the US dollar;


Oil Forecast and Breakdown


From the supply, the sharp decline imports and modest drop in production resulted in a sharp drop in oil supply. From the demand, refinery inputs sharply declined as well. Further, the storage dropped again. In total, while the supply was still higher than demand, the gap between the two has contracted. This could suggest the oil market has tightened. Looking forward, the upcoming reports regarding U.S and China could offer some additional insight regarding the progress in the demand for oil. The IEA and OPEC reports could offer info about the changes in production and updated forecasts for supply and demand. The gap between Brent and WTI ranged between $8 and $9. The tighter oil market in the U.S may narrow the gap between WTI and Brent oil. Moreover, if the US dollar continues to weaken, this could pull up oil prices.


The bottom line, on a weekly scale, I guess oil price may continue to slowly rise and the gap between WTI and Brent to slightly contact.

[Samirofi]

Oil Outlook for February 17-21

Oil price (WTI and Brent) didn’t do much during last week. WTI oil slightly rose by 0.42%; Brent oil slipped by 0.77%. As a result, the gap of Brent oil over WTI narrowed: The premium ranged between $8.38 and $8.74. Last week, the EIA’s weekly report showed a rise in oil’s stockpiles of 2 million barrels. Will oil change direction and fall? This week, several reports may affect oil prices. These items include: U.S Philiy Fed index, China’s manufacturing PMI, and EIA oil weekly report.


Here is a weekly forecast for the oil market for February 17^th to 21^st:


Oil Prices – February Overview


During last week, crude oil price (WTI) slightly rose by 0.42% and reached by Friday $100.3/b; on the other hand, Brent oil slipped by 0.77% to $108.73/b;


In the chart below are the daily shifts in WTI and Brent oil prices during the past several months (prices are normalized to January 31^st, 2013). As you can see below, Brent and WTI oil prices slightly rose in recent weeks.



Premium of Brent over WTI – February


The gap between Brent and WTI oilslightlynarrowed last week as it ranged between $8.38 and $8.74 per barrel. During the week, the premium fell by $1.28 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles rose by 2 MB and reached 1,731.6 million barrels. The linear correlation between the developments in stockpiles has remained stable at -0.202: this correlation suggests that oil price, assuming all things equal, may slightly decline next week. But in order to better understand the fundamentals let’s analyze the developments in supply and demand:


Supply: Oil imports sharply rose by 3.5% last week. Conversely, oil production inched down by 0.1%; the total supply increased by 1.6%;


Demand: Refinery inputs declined by 0.8% last week. In total, the demand was lower than the supply, and the gap between supply and demand widened. This current gap may pull down oil prices as the U.S oil market is looser than it was last week.


The chart below presents the changes in the gap between supply and demand and the price of oil.



If U.S oil market loosens further, this could drag down oil price.

The next weekly report will be released on Wednesday, February 19^th and will refer to the week ending on February 14^th.


OPEC’s Oil production rises


The OPEC report came out last week and showed a modest gain in OPEC’s oil production in the past month: OPEC’s production during January reached 29.711 million bbl/d – a 28 thousand bbl/d gain. This modest rise in production is mostly due to Libya’s sharp rise in production from 240 thousand bbl/d to 510 thousand bbl/d – a 270 thousand bbl/d. Libya’s current output is still at third of its capacity. This rise was offset by the drop in production in Saudi Arabia and Angola. If OPEC’s oil production further rises, this could continue to pressure down oil prices mainly Brent oil.


IEA’s Update as of February 2014


According to the update report, OECD’s industry oil inventories plummeted by 56.8 mb during December. Global oil supplies edged down by 290 tb /d month-over-month to 92.1 mb/d during January.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Wednesday – China Manufacturing PMI (flash): Last month’s report regarding January 2014 the Manufacturing PMI inched down to 49.6 – i.e. China’s manufacturing sectors is contracting for the first time since July 2013. If in the upcoming update the PMI index continues to drop, it could signal the progress in China’s economy is slowing down. This may also affect commodities prices;


Thursday – Philly Fed Manufacturing Index: In the last survey regarding February, the growth rate slightly rose from +7 in December to +9.4 in January (the recent Philly Fed review);


Oil Outlook and Breakdown


From the supply, the sharp rise imports and modest decline in production resulted in an increase in oil supply. From the demand, refinery inputs declined again. Further, the storage rose. In total, the supply is still higher than demand and the gap between the two has widened. This could suggest the oil market has loosened. Looking forward, the upcoming reports regarding U.S and China could offer some additional insight regarding the progress in the demand for oil. The OPEC report showed a modest rise in production and perhaps another rise in production from Libya could increase OPEC’s production in the coming months. The gap between Brent and WTI ranged between $8 and $9. The looser oil market in the U.S may slightly widen the gap between WTI and Brent oil. Conversely, if the US dollar continues to weaken, this could pressure up oil prices.


The bottom line, on a weekly scale, I guess oil price may change course and start to slowly fall and the gap between WTI and Brent to slightly widen.

[Samirofi]

Oil Outlook for February 24-28

Oil price (WTI and Brent) resumed its rally during last week. WTI oil increased by 1.9%; Brent oil, by 1%. As a result, the gap of Brent oil over WTI slightly narrowed: The premium ranged between $7.16 and $8.43. Last week, the EIA’s weekly report showed a decline in oil’s stockpiles of 2.5 million barrels. Will oil continue to rise? This week, several reports may affect oil prices. These items include: U.S GDP for Q4, U.S core durable good, China’s manufacturing PMI, and EIA oil weekly update.


Here is a weekly outlook for the oil market for February 24^th to 28^th:


Oil Prices – February Overview


During last week, crude oil price (WTI) increased again by 1.9% and reached by Friday $102.2/b; further, Brent oil increased by 1% to $109.85/b;


In the chart below are the daily changes in WTI and Brent oil prices during the past several months (prices are normalized to January 31^st, 2013). As you can see, Brent and WTI oil prices rose in recent weeks.



Premium of Brent over WTI – February


The difference between Brent and WTI oilnarrowed again last week as it ranged between $7.16 and $8.43 per barrel. During the week, the premium dropped by $0.78 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles declined by 2.5 MB and reached 1,729.1 million barrels. The linear correlation between the developments in stockpiles has remained stable at -0.199: this correlation implies that oil price, assuming all things equal, may slightly rise next week. But in order to better understand the fundamentals let’s examine the changes in supply and demand:


Supply: Oil imports declined by 0.4% last week. Conversely, oil production inched up by 0.3%; the total supply remained flat;


Demand: Refinery inputs edged down by 0.1% last week. In total, the demand was lower than the supply, and the gap between supply and demand slightly widened. This current gap may pressure down oil prices as the U.S oil market is moderately looser than it was last week.


The chart below shows the changes in the gap between supply and demand and the price of oil.



If U.S oil market loosens further, this could pull down oil price.


The next weekly report will be released on Wednesday, February 26^th and will refer to the week ending on February 21^st.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Thursday – U.S Core Durable Goods: This monthly report regarding January may indirectly indicate the changes in U.S. demand for commodities such as oil and gas. As of December 2013, new orders of manufactured durable goods decreased to $229.3 billion; if this report shows another fall in new orders, then it could pull down not only the USD but also commodities;


Friday – Second U.S GDP 4Q 2013 Estimate: This will be the second estimate of U.S’s fourth quarter 2013 real GDP growth. In the early estimate, the U.S GDP grew by 3.2% in the fourth quarter of 2013. In the third quarter the GDP grew by 4.1%. If the growth rate in the second estimate rises from the first estimate, this could positively impact not only the US dollar but also commodities prices;


Friday – China Manufacturing PMI: As of January, the Manufacturing PMI slipped to 50.5 – i.e. China’s manufacturing sectors are growing but at a slower pace. If in the upcoming report the PMI falls again, it could signal slowdown in the growth rate in China’s manufacturing sectors, which could also negatively affect oil prices;


Oil Forecast and Breakdown


From the supply, the modest decline in imports was offset by the slight rise in production so that the oil supply remained nearly unchanged. From the demand, refinery inputs inched down again. Further, the storage slipped. In total, the supply was still higher than demand but the gap between the two remained nearly unchanged. This could suggest the oil market has moderately loosened or perhaps just remained unchanged. Looking forward, the upcoming reports regarding U.S and China could offer some additional information regarding the progress in the demand for oil. The gap between Brent and WTI ranged between $7 and $8. The looser oil market in the U.S may further widen the gap between WTI and Brent oil. Conversely, if the US dollar continues to weaken against the Euro, this could pull up oil prices.


The bottom line, on a weekly scale, I guess oil price may slightly come down; the gap between WTI and Brent may slightly narrow.

[Samirofi]

Oil Outlook for March 3-7

Oil price (WTI) slightly rose during last week. WTI oil inched up by 0.4%; Brent oil slipped by 0.8%. As a result, the gap of Brent oil over WTI narrowed again: The premium ranged between $6.48 and $7.82. Last week, the EIA’s weekly report showed a modest drop in oil’s stockpiles of 0.5 million barrels. Will oil change direction? These items include: U.S NF payroll report, U.S durable goods, U.S and China’s manufacturing PMI, and EIA oil weekly update.


Here is a weekly outlook for the oil market for March 3^rd to 7^th:


Oil Prices – February Overview


During last week, crude oil price (WTI) rose again by 0.38% and reached by Friday $102.59/b; on the other hand, Brent oil decreased by 0.71% to $109.07/b;


In the chart below are the daily shifts in WTI and Brent oil prices during the past several months (prices are normalized to December 31^st, 2013). As you can see, Brent and WTI oil prices increased in recent weeks.



Premium of Brent over WTI – February


The difference between Brent and WTI oilnarrowed again last week as it ranged between $6.48 and $7.82 per barrel. During the week, the premium dropped by $1.17 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles slipped by 0.5 MB and reached 1,728.6 million barrels. The linear correlation between the changes in stockpiles has remained stable at -0.197: this correlation implies that oil price, assuming all things equal, may slightly increase next week. But in order to better understand the fundamentals let’s examine the changes in supply and demand:


Supply: Oil imports dropped by 3.3% last week. Conversely, oil production remained unchanged; the total supply decreased by 1.6%;


Demand: Refinery inputs edged down by 0.2% last week. In total, the demand was lower than the supply, and the gap between supply and demand narrowed. This current gap may pressure down oil prices as the U.S oil market is moderately tighter than it was last week.


The chart below shows the shifts in the gap between supply and demand and the price of oil.



If U.S oil market loosens further, this could pull down oil price.


The next weekly report will be released on Wednesday, March 5^th and will refer to the week ending on February 28^th.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Monday – China Manufacturing PMI (HSBC’s final estimate): This is HSBC’s last estimate of its February’s PMI index. Last month’s Manufacturing PMI reached 49.5 – i.e. China’s manufacturing sectors are contacting. If the updated PMI index drops again, this will suggest China’s manufacturing conditions aren’t improving;


Monday – U.S Manufacturing PMI: This report will pertain to February 2014. In January, the index tumbled down to 51.3%; this means the manufacturing is growing at a much slower pace; this index may affect stock markets, USD, and crude oil and natural gas markets;


Tuesday – Australian GDP Fourth Quarter 2013: This quarterly report will refer to the Australia’s GDP growth rate for the fourth quarter of 2013. In the third quarter of 2013, the GDP grew by 0.6% (seasonally adjusted). Australia is among the leading countries in exporting commodities such as oil, LNG, and metal ores to big economies such as China and Japan;


Thursday – U.S Factory Orders: This report will refer to the developments in U.S. factory orders of manufactured durable goods during February; in the latest report factory orders decreased by 1.5%; this report will offer some insight regarding the progress of the U.S economy;


Friday – U.S. Non-Farm Payroll Report: In the previous employment report regarding January 2014, the labor market modestly grew: The number of non-farm payroll employment increased by 113k – much lower than the number many had expected; the U.S unemployment rate inched down to 6.6%;


Oil Forecast and Breakdown


From the supply, the plunge in imports and stagnate production resulted in a drop in the oil supply. From the demand, refinery inputs slipped again. Further, the storage slightly fell. But in total, the supply was still higher than demand even though the gap between the two narrowed. This could suggest the oil market has moderately tighter. Looking forward, the upcoming reports regarding U.S and China could offer some additional information regarding the progress in the demand for oil. The gap between Brent and WTI ranged between $6 and $7. The tighter oil market in the U.S may further narrower the gap between WTI and Brent oil. Moreover, if the US dollar continues to weaken against the Euro, this could pull up oil prices.


The bottom line, on a weekly scale, I guess oil price may slightly rise; the gap between WTI and Brent may drop again.

[Samirofi]

Oil Outlook for March 31- April 4

Oil prices (WTI and Brent) rallied last week. WTI and Brent oil rose by 2.2% and 1.1%, respectively. As a result, the difference of Brent oil over WTI narrowed again: The premium ranged between $6.4 and $7.46. Last week, the EIA’s weekly report showed a rise in oil’s stockpiles of 5.5 million barrels. Will oil continue to rise? This week, several reports may affect oil prices. These items include: U.S factory orders, China’s manufacturing PMI, U.S non-farm payroll report, U.S manufacturing PMI, and EIA oil weekly update.


Here is a weekly outlook for the oil market for March 31^st to April 4^th:


Oil Prices – March Overview


During last week, crude oil price (WTI) increased by 2.2% and reached by Friday $101.67/b; moreover, Brent oil rose by 1.1% to $108.07/b;


In the chart below are the daily shifts in WTI and Brent oil prices during the past several months (prices are normalized to December 31^st, 2013). As you can see, Brent and WTI oil prices rallied past several days.



Premium of Brent over WTI – March


The gap between Brent and WTI oilnarrowed last week as it ranged between $6.4 and $7.8 per barrel. During the week, the premium slipped by $1.06 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles rose by 5.4 MB and reached 1,734.2 million barrels. The linear correlation between the shifts in stockpiles has remained stable at -0.207: this correlation suggests that oil price, assuming all things equal, may decline next week. But in order to better analyze the fundamentals let’s examine the changes in supply and demand:


Supply: Oil imports rose by 2% last week. Furthermore, oil production slightly rose by 0.4%; the total supply increased by 1.2%;


Demand: Refinery inputs slipped by 0.3% last week. In total, the demand remained well below the supply, and the gap between supply and demand widened. This turn of events may drag down oil prices as the U.S oil market is looser than it was last week. After all, the linear correlation between the weekly price of oil lagged by on period and the shifts in the gap between supply and demand is mid-strong and negative at -0.305.


The chart below shows the changes in the gap between supply and demand and the price of oil.



If U.S oil market loosens further, this could pull down oil price.


The next weekly report will be released on Wednesday, April 2^nd and will pertain to the week ending on March 28^th.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Monday – China Manufacturing PMI: As of February, the Manufacturing PMI inched down to 50.2 – i.e. China’s manufacturing sectors are still growing but at a slower pace. If in the upcoming report the PMI declines again, it could signal slowdown in the progress of China’s manufacturing sectors, which could also negatively affect oil;


Tuesday – U.S Manufacturing PMI: This report will refer to March 2014. In February, the index bounced back to 53.2; this means the manufacturing is growing at a faster pace;


Wednesday – U.S Factory Orders: This report will refer to the changes in U.S. factory orders of manufactured durable goods during March; in the latest report factory orders declined by 0.7%; this report will offer some insight regarding the progress of the U.S economy;


Thursday – Australian Retail Sales: This monthly update will refer to February 2014. In the recent report, the seasonally adjusted retail sales rose by 1.2% during January; this news may affect the Aussie dollar, which tends to be correlated with oil and gold prices;


Friday – U.S. Non-Farm Payroll Report: In the last employment report regarding February 2014, the labor market grew again: The number of non-farm payroll employment rose by 175k – higher than the number many had expected; the U.S unemployment rate inched up to 6.7%. If the employment growth exceeds 150 thousand (in additional jobs), this may pull up oil prices;


Oil Outlook and Breakdown


From the supply standpoint, the recent rally in imports and modest gain in production resulted in a sharp rise in oil supply. From the demand standpoint, refinery inputs continue to slowly decline. Moreover, the storage rose. In total, the supply was higher than demand and the difference between the two expanded again. This could suggest the oil market has loosened. Looking forward, the upcoming reports referring to the U.S and China could offer some information regarding the progress in the demand for oil. If these reports are mostly positive, this could pressure back up the price of oil. The gap between Brent and WTI ranged between $5 and $10 and is likely to remain at this range.


The bottom line, on a weekly scale, Oil might slightly decline in the near future.

[Samirofi]

Oil Outlook for April 7-11

Oil prices (WTI and Brent) changed direction and declined last week. WTI and Brent oil slipped by 0.5% and 1.2%, respectively. As a result, the gap of Brent oil over WTI contracted again: The premium ranged between $5.2 and $6.2. Last week, the EIA’s weekly report showed a modest drop in oil’s stockpiles of 1.2 million barrels. Will oil bounce back? This week, several reports may affect oil prices. These items include: U.S PPI, China’s new loans, U.S JOLTS job opening, OPEC monthly report, IEA monthly update, and EIA oil weekly update.


Here is a weekly outlook for the oil market for April 7^th – 11^th:


Oil Prices – April Overview


During last week, crude oil price (WTI) decreased by 0.5% and reached by Friday $101.14/b; moreover, Brent oil dropped by 1.2% to $106.72/b;


In the chart below are the daily changes in WTI and Brent oil prices during the past several months (prices are normalized to December 31^st, 2013). As you can see, Brent and WTI oil prices changed direction and slipped in the past several days.



Premium of Brent over WTI – April


The difference between Brent and WTI oilnarrowed last week as it ranged between $5.17 and $6.18 per barrel. During the week, the premium slipped by $0.82 per barrel.



Oil Stockpiles, Demand and Supply


The oil stockpiles fell by 1.2 MB and reached 1,732.9 million barrels. The linear correlation between the changes in stockpiles has remained stable at -0.205: this correlation implies that oil price, assuming all things equal, may bounce back next week. But in order to better examine the fundamentals let’s consider the changes in supply and demand:


Supply: Oil imports fell by 1% last week. Furthermore, oil production slightly increased by 0.4%; the total supply decreased by 0.3%;


Demand: Refinery inputs rose by 0.2% last week. In total, the demand remained below the supply, and the difference between supply and demand slightly narrowed. This recent development may pull back up oil prices as the U.S oil market is slightly tighter than it was a week back. After all, the linear correlation between the weekly price of oil lagged by on period and the changes in the gap between supply and demand is mid-strong and negative at -0.302.


The chart below presents the changes in the difference between supply and demand and the price of oil.



If U.S oil market continues to tighten, this could pull up oil price.


The next weekly report will be released on Wednesday, April 9^th and will refer to the week ending on April 4^th.


IEA Monthly Report


This upcoming monthly report will present an updated (for March) outlook and analysis for the global crude oil and natural gas market for 2013 and 2014.


The next report will be published on Thursday, April 10^th.


OPEC Monthly Report


OPEC will release a monthly update of the main developments in crude oil and natural gas’s supply and demand worldwide; the report will also refer to the changes in the production of OPEC countries during August 2012; this news may affect oil prices (See here a summary of the previous report).


The next report will be released on Friday, April 11^th.


Oil Related News for the Week


Here are several news items that could influence oil investors:


Tuesday – U.S JOLTS Job Openings: The Bureau of Labor Statistics will publish its monthly update on the U.S number of job openings during March, excluding the farming industry; in the past report regarding February, the number of jobs opening was 3.97 million;


Thursday – China’s Trade Balance: According to the recent monthly update, China’s trade balance dropped from a surplus to a $23 billion deficit; if the deficit expands further, it could indicate China’s economy isn’t improving and thus may negatively affect commodities;


Thursday – China’s CPI: The CPI slipped to an annual rate of 2%; if the annual rate declines again, it could signal the Chinese economy is slowing down.


Oil Outlook and Breakdown


From the supply side, the recent sharp fall in imports offset the modest rise in production; and this resulted in a slight decline in oil supply. From the demand side, refinery inputs changed direction and slightly increased. Moreover, the storage moderately declined. In total, the supply was still higher than demand but the difference between the two narrowed. This could suggest the oil market has tightened. Looking forward, the forthcoming reports regarding the U.S and China could offer some additional insight regarding the latest changes in these two top oil consumers worldwide. The difference between Brent and WTI ranged between $5 and $7 and is likely to remain at this range.


The bottom line, on a weekly scale, oil might slightly recover in the near future.