Crude & Brent Oil Fundamental Analysis October 13, 2014 Forecast

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Updated: Aug 25, 2015, 00:00 UTC

Analysis and Recommendations: Crude Oil continues to search for a bottom trading at 84.49 down by $1.28 as the dollar regained momentum. Iran has lowered

Crude & Brent Oil Fundamental Analysis October 13, 2014 Forecast

Analysis and Recommendations:

Crude Oil continues to search for a bottom trading at 84.49 down by $1.28 as the dollar regained momentum. Iran has lowered the price of oil after the Saudi’s dropped prices sparking a global price war. Brent Oil is down 78 cents to trade at 89.27. The US dollar’s upside momentum has faded, but oil prices remain depressed. Many observers try, too hard perhaps, to link the decline in commodity prices in general, and oil in particular, to the appreciation of the dollar.

Demand in China, the key consumer of commodities, has softened, and its crackdown on using commodities to disguise capital flows, or use as collateral for loans, may also be weighing on demand. This weakness in the global economy stands in contrasts to the US economy, which grew 4.6% in Q2, and appears to have been around 3% in Q3. This contrast, or divergence, has helped bolster the dollar.

However, this conventional narrative does not do justice to the supply side. From a high level, more often than not, dramatic moves in commodities seem to be a reflection of supply shocks more than demand shocks. For example, record harvests in the US explain the decline in grain prices more than the dollar or a slowing of the world economy can.

The Saudi oil stance may be a warning shot to OPEC, which meets early next month. By boosting output, it may enhance its effort to reinstate discipline within OPEC. Its internal battle within OPEC means that if it does not pick-up market share, its rival Iran would. Some observers think there is a proxy war of sorts being fought between Saudi Arabia and Iran. Libya and Venezuela domestic considerations do not favor cuts in output.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

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This Week in Petroleum
Release Schedule: Wednesday @ 1:00 p.m. EST (schedule)

Gasoline and Diesel Fuel Update
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Weekly Petroleum Status Report
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Today’s economic releases actual vs. forecast:

Cur.	Imp.	Event	Actual	Forecast	Previous
JPY		Monetary Minutes
JPY		Tertiary Industry Activity	-0.1%	0.2%	-0.3%
AUD		Home Loans (MoM)	-0.9%	0.1%	0.3%
GBP		Trade Balance (Aug)	-9.10B	-9.60B	-10.41B
GBP		Trade Balance Non-EU	-3.59B	-4.00B	-4.76B
USD		Export Price Index		-0.1%	-0.5%
USD		Import Price Index		-0.7%	-0.9%
CAD		Unemployment Rate		7.0%	7.0%

Upcoming Economic Events that you should be monitoring:

Cur.	Imp.	Event	Actual	Forecast	Previous
	Holiday	Japan – Health-Sports Day
	Holiday	Canada – Thanksgiving Day
NZD		FPI (MoM) (Sep)			0.3%
CNY		Exports (YoY) (Sep)			9.4%
CNY		Imports (YoY) (Sep)			-2.4%
CNY		Trade Balance (Sep)			49.83B