Author: SondraHunter

It could be a double whammy for lower oil prices in the run up to 2012 as next week marks what investors and traders see as “a very important week” for the euro project, as any possible collapse in the European currency would boost the US dollar and also hit oil demand in Europe.

ICE US Dollar Index

The ICE US dollar Index, which tracks the US dollar against six major world currencies (including the euro) had a mixed week and closed Friday’s trading session at 78.750 after pushing towards the 80 mark in late November.

The US dollar headed for its first weekly loss versus the euro since October as US unemployment dropped in November and optimism that the IMF (International Monetary Fund) will channel European Central Bank loans to the region’s debt strapped nations.

However, gains in the euro were capped by concern that the summit of European leaders next week will not be able to stem the debt crisis that hounds the eurozone.

Oil Prices Heading Lower?

Most investor and bank forecasts for oil prices going forward into 2012 remain bullish. But, with great uncertainty in Europe over the debts of Greece, Italy, Portugal and Spain, there are possibilities that any move move down for the euro would see the US dollar gain ground, which typically is negative for commodity prices as they are priced in US dollars.

Goldman Sachs and Oil Prices

Earlier this week, Goldman analysts maintained their 12 month “overweight” stance on commodities (including oil prices), as well as their 2012 commodity price forecasts citing their economists expectation of a global economic slowdown, but not a global recession.

Goldman Sachs expects Brent oil to end 2012 at $127.50 a barrel, average $130 a barrel in 2013 and end that year higher at $135 a barrel.

“We continue to view the crude oil market as navigating between the currently tight physical oil markets and the threat that the European debt crisis could trigger a global economic recession in the near future, which would lead to a sharp drop in oil demand.” analysts said in a note.

However, markets will remain on edge and whilst it is true that oil prices and stock markets have had a bullish week, decisions, or lack of decisions in Europe next week will undoubtedly affect not only oil, but may well see the US dollar, the world’s favourite safe haven currency shoot higher.

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A stronger US dollar on the back of euro debt collapse could sink oil prices

WTI oil futures close off the week’s trading session above $101 a barrel as the American oil contract was boosted further on Friday after the latest jobs data out of the US saw a sharp drop in America’s unemployment rate.

WTI Oil Futures – Closing Price

US Light crude oil futures for January 2012 delivery ended the week’s trading session at $101.04 a barrel on the NYMEX, trading 1 percent higher at close yesterday, which was the highest settlement price for NYMEX WTI since 16th November.

US WTI oil futures finished last week’s session (Friday 26th November) at $97.29 a barrel.

US Jobs Data

The US Labour Department reported on Friday that the jobless rate in America fell to 8.6 percent in November from 9 percent the month before, which is a 32 month low.

“Oil prices rallied on the job report this morning which showed some job creation. We were creating jobs and that’s good news.” said Andy Lipow of Lipow Oil Associates.

“Official US unemployment data, as always, is shaking up general markets like a snow globe. Crude prices immediately rallied on the release, but have since pared these gains, and even a little more.” said Matt Smith, an analyst with Summit Energy, in a note to clients.

Also supporting higher oil prices was the US Senate’s unanimous vote Thursday for harsh new sanctions on Iran, OPEC’s second largest oil producer, adding to tensions between the West and Tehran over its nuclear program.

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WTI oil price closes week at $101 a barrel, US jobs data supports

The prices of WTI crude oil is holding out at $100 a barrel early on Friday after the US Senate has unanimously approved economic sanctions on Iran targeting the country’s oil industry, despite warnings the move could backfire.

Latest WTI Oil Price

US Light crude oil futures for January 2012 delivery was trading at $100.57 a barrel, 07.35 GMT this morning in electronic trading on the NYMEX.

The US oil contract closed off Thursday’s trading session at $100.23, or 0.1 percent lower.

Iran Sanctions – Oil Prices

The US effort to thwart Iran’s alleged nuclear ambitions followed new EU sanctions imposed earlier on Thursday. Under the new American sanctions, drafted by Democrat Robert Menendez and Republican Mark Kirk, foreign banks that do business with Iran’s central bank would be cut off from the US financial system.

The sanctions are designed to come into effect after a six month grace period, in order to give oil markets time to factor them in.

Meanwhile, diplomats at the Iranian embassy in London must leave Britain by Friday afternoon. They were ordered to go after hundreds of Iranian protesters stormed the UK embassy in Tehran on Tuesday.

As sanctions against Iran build, the country can still export crude oil to other countries including China and Japan, whilst some EU countries including Italy, Spain and Greece still have oil contracts with Iran, which they intend to honour.

Since the recent sanctions do not involve any drop in Iran’s actual crude oil production as was the case in Libya, the effect of these sanctions on oil prices could well be very light.

Oil Price Forecast

“Even though the economic situation is worse than at the beginning of the year, the oil price will be staying at this high level. We have a dangerous possibility of a war, at the worst, so we always have to put some premium in this market.” said Ken Hasegawa, a commodity sales manager at Newedge in Tokyo, who sees NYMEX WTI oil futures trading between $98.50 and $101.50 a barrel over the short term.

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WTI oil price holds at $100 after US passes sanctions against Iran

Brent oil futures open today’s trading session hanging near $110 a barrel as ongoing tensions over Iran add fuel to higher crude oil prices after Iranian students stormed the British embassy in Tehran, escalating worries about the oil exporting nation.

Latest Brent Oil Price

In London, Brent crude oil futures for January 2012 delivery was trading at $110.07 a barrel, 07.15 GMT this morning on the ICE Futures Exchange.

The European oil contract closed off Tuesday’s trading session up 1.7 percent, at $110.82 a barrel.

Iran Tensions

The political action in Tehran was the latest surrounding the still simmering Middle East and helped to push oil prices higher, with US oil back near $100 a barrel.

Reports this morning suggest that the UK is withdrawing its diplomats from Iran following the attack on its embassy in the capital with a first group of embassy staff are reported to be flying out to Dubai.

“Iran is always such a wild card. From a psychological standpoint, trouble in the Middle East is important for oil prices.” said Hamza Khan at the Schork Group, an energy trading adviser.

British Prime Minister David Cameron has warned of “serious consequences”, while the US, EU and UN Security Council also condemned the attack.

Iranian Oil Minister Rostam Qasemi said in a 19th November interview with Al Jazeera that any disruption to his nation’s oil exports would create severe problems for global markets.

Iran pumped 3.6 million barrels of oil a day last month, a recent survey showed and exported an average 2.58 million barrels a day in 2010, according to OPEC figures.

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Brent futures hang near $110 as Iran tensions add fuel to higher crude oil prices

US WTI oil futures open Wednesday’s trading session back near $100 a barrel as tensions concerning Iran push oil prices higher, whilst American crude oil inventories rise again according to the latest weekly US API (American Petroleum Institute) report.

Latest WTI Oil Price

US Light crude oil futures for January 2012 delivery were trading at $99.56 a barrel, 06.55 GMT this morning in electronic trading on the NYMEX.

The US crude oil contract ended yesterday’s trading session up 2.1 percent at $99.76.

US Crude Oil Inventories

American crude oil inventories rose 3.4 million barrels in the week ended 25th Novemeber, the American Petroleum Institute said late on Tuesday.

The report comes ahead of official word on weekly inventories from the US EIA (Energy Information Administration) on Wednesday. Analysts are expecting US crude oil inventories to rise by 1.5 million barrels.

WTI crude oil prices rallied to $100.74 a barrel on Monday, as prices were boosted by hopes EU leaders will reach a deal to contain Europe’s debt crisis and amid growing fears over a disruption to Iranian supplies.

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WTI oil price trading back near $100 as US crude inventories rise

WTI oil futures end the week’s trading session at $97 a barrel as oil prices remain under pressure from a stronger US dollar which has been making more gains against the euro off the back of the euro zone debt crisis.

WTI Oil Futures – Closing Price

US Light crude oil futures for January 2012 delivery ended the week’s trading session at $97.29 a barrel on the NYMEX, trading 0.2 percent higher at close yesterday.

US WTI oil futures finished last week’s session (Friday 19th November) at $97.41 a barrel.

Euro, Dollar and Oil Prices

The euro declined 0.8 percent to $1.324 against the US dollar on Friday, and the dollar gained 0.6 percent against a basket of other currencies on the ICE US Dollar Index.

A rising dollar tends to drive oil prices lower, as dollar denominated commodity becomes more expensive for traders using other currencies.

With continued euro turmoil expected in the weeks ahead one analyst said euro worries could dominate the oil market for the foreseeable future.

“We look for the euro zone to be the primary driver of oil pricing through the balance of this month and well into next.” Ritterbusch and Associates said in a note.

Europe’s debt crisis is worsening.

The US trading session was shorter than usual on Friday, with trading on the New York Stock Exchange closing at 1pm. Eastern time. Also, WTI oil trading volumes dropped to the lowest in the year as most traders were away for Thanksgiving holiday.

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WTI oil price holds near $97, US dollar gains against a weaker euro

WTI oil futures open Friday’s trading session near $96 a barrel as a stronger US dollar helped to hold crude oil prices under three digits amid the lack of big market moving news and thin volumes on Thursday as America celebrated Thanksgiving Day.

Latest WTI Oil Price

US Light crude oil futures for January 2012 delivery was trading at $96.29 a barrel, 07.55 GMT this morning in electronic trading on the NYMEX.

Stronger US Dollar

The US dollar climbed extended this week’s gains, as investors sought the safest assets on concern economies in the euro area will worsen as leaders struggle to halt the region’s debt crisis.

The US Dollar Index, which tracks the dollar against six major world currencies was at 79.415 in early trading today, at levels not seen since early October.

A stronger US dollar is again pushing commodity prices lower, however crude oil prices remained supported amid fears over a disruption to oil supplies in the Middle East.

Oil prices may rise this winter as France’s call for a European embargo on crude supplies from Iran increases a geopolitical premium on prices, according to Gordon Kwan, head of energy research at Mirae in Hong Kong.

“Iran has a grip over the Strait of Hormuz, through which about a third of seaborne oil cargoes from the Middle East passes. Potential military confrontations over Iran’s nuclear program will keep Brent about $10 to $15 a barrel higher than WTI oil futures.” Kwan said in emailed comments today.

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US WTI oil futures trading near $96 as dollar holds crude prices down