analysis of WTI price trends & outlook for Q4 2010
WTI prices averaged $75.14 per barrel for September vs. $76.61 per barrel for August. In August, for 22 trading days, prices increased only 7 days (32%) and declined 15 days (68%). The daily increases averaged 1.68% and the daily declines averaged 1.38%. Bearish and bullish influences very nearly offset each other during August but the slight bullish edge yielded an increase in the monthly average price for the third consecutive month.
In September, however, for 23 trading days, prices increased 12 days (52%) and declined 11 days (48%). The daily increases averaged 1.64% and the daily declines averaged 0.98%. From this perspective, price trends in September were, on balance, more bullish than in August but the monthly average price for September was $75.15 per barrel or $1.46 per barrel (1.9%) below the average for August.We note that the bullish trend of July continued into the first two trading days of August and pushed prices to a 3 month high of $82.59 per barrel. The "on balance" bearish trend during August pushed prices to a low of $71.71 per barrel on the last trading day of the month.
From a purely domestic perspective, considering bearish fundamentals and the established trading zone ($70-80 per barrel), WTI prices were near the upper end of the trading range and seem poised to fall by $8-10 per barrel during October/November. We note, however, that dated Brent prices jumped to an average premium of $2.70 per barrel for September. Furthermore, spot Dubai/Oman prices recovered to near parity versus WTI in September after being consistently priced at discounts of $1.50-3.75 per barrel for the previous 3 months. We have to recognize, however, that the purely domestic perspective is no longer the only perspective that influences near term trends in WTI Prices. Specifically, from a global perspective, fundamentals are less bearish and other considerations (e.g., trends in the Euro/USD) are more bullish for WTI prices. Finally, in the immediate term for Q4, geopolitics are perhaps more of an enigma than during the past 90 to 120 days.
Have crude oil prices finally turned the corner and are they poised to break out of the established trading range ?
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