Crude & Brent Oil Weekly Fundamental Analysis, October 20-24, 2014 Forecast

Weekly Analysis and Recommendation: 

Crude Oil recovered on Friday to close at 82.97 after falling to trade at 80.29 as the global glut continued on record production. On Thursday the delayed inventory report in the US showed a significant drop in stocks. Brent Oil moved up to 86.21 but the narrowing of the spread continued to worry energy traders. There has also been some confusion in the ranks this week, with Saudi Prince Alwaleed bin Talal al-Saud publishing an open letter on his website expressing disbelief at media reports that Saudi Arabia would allow oil prices to fall below $90 a barrel. The Prince–most fondly known for dwarf-tossing parties and his investments in Apple, Time-Warner, and News Corp.–warns that 90% of Saudi Arabia’s budget is reliant on oil revenues and that a continued fall in prices would be catastrophic.

In the meantime, OPEC-member Venezuela has been on the other side of the output-cut divide, calling for an emergency meeting of the group to respond to falling prices. But Kuwait and Saudi Arabia aren’t budging.

While Kuwait and Saudi Arabia can clearly survive a couple more months of low oil prices—hence their unwillingness to cut output—Russia will find it more difficult. As the Economist notes this week, while Russia’s economic growth is already poor, “further drops in the oil price could be very painful. After all, oil and gas make up 70% of Russia’s exports and half of the federal budget.”

The ample supply is largely due to surging production from Russia and the US, and the American shale boom has been threatening to overtake Saudi Arabia’s own output. With this in mind, Saudi Arabia has less incentive to reduce output to boost prices.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Historical: From 2011 to Present

Highest:  110.55 on Mar 01, 2012

Average: 93.60 over this period

Lowest: 74.95 on Oct 04, 2011

 

WEEKLY

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

Gasoline and Diesel Fuel Update
Release Schedule: Monday between 4:00 and 5:00 p.m. EST (schedule)

Weekly Petroleum Status Report
Release Schedule: The wpsrsummary.pdf, overview.pdf, and Tables 1-14 in CSV and XLS formats, are released to the Web site after 10:30 a.m. (Eastern Time) on Wednesday.

Economic Highlights of the coming week:

Upcoming Government Bond Auctions

Date Time Country 

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Norway Bond auction

Oct 21 11:00 UK Auctions 2.75% 2024 Gilt

Oct 22 11:30 Germany Eur 2.0bn Aug 2046 Bund auction

Oct 23 11:03 Sweden I/L bond auction

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30 & 29

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29