Crude Oil Weekly Fundamental Analysis April 16-20, 2012, Forecast

By FXEmpire.com

Introduction: Crude Oil is considered the king of the commodities markets.

The Strategic Petroleum Reserveis the United States’ emergency oil stockpile, and it is the largest emergency petroleum supply in the world. The reserve stores about 570 million barrels of crude oil in underground salt caverns at four sites along the Gulf of Mexico. Any dipping into this reserve is going to be big news.

Brent Crude is traded in London as something called Futures contracts, which are priced in US Dollars. Now, all you traders brave enough to run your positions over a period of days or weeks, pay attention here:
Oil spread bets are monthly contracts. This means that:
a) You don’t pay any rollover charges; the bet will run until the contract ends;
b) Now, get this, the spread bet runs out (contract expires) in the middle of the month before the month it says on the tin. So, for example, the Brent Crude August contract runs out (expires) on 14th July. How dumb is that?

What to watch when trading
trading oil involves keeping an eye on a few different factors to the standard investment stuff. In addition to the run of the mill economic data that will gives clues as to whether the world’s factories are burning more or less oil there’re a couple of seasonal factors:

First, courtesy of Top Gear, there’s the US Driving Season

Now switch over to the weather forecast to see how windy it is. The US Hurricane Season officially runs from 1st June to 30th November, but don’t expect the forces of nature to pay too much attention to the dates. Hurricanes tend to hit the Gulf of Mexico, which is filled to the rafters with oilrigs (over 20 rigs went missing due to Hurricane Katrina in 2005).

Notice the seasonal rise in the oil price during the hurricane season.

And finally the most specific economic data to focus on are the US weekly oil and gas inventory figures, issued by the Energy Information Administration and released every week on Wednesday afternoons. If you trade oil you can’t afford to miss these.

Analysis and Recommendation:

Crude Oil was weak throughout the week tumbling from close to 107.00 last week to hit the low of 100.70. Markets were starting to believe that we would soon be seeing 100.00 or below per barrel prices. The overall look for oil is bearish.

This week the Saudi and OPEC continued to point out the fact that there was no supply disruption and ample inventories.

The rhetoric from Iran was down to a mumble with the Summit scheduled to begin on April 13^th between western nations, OPEC producers and Iran.

Inventories this week showed a huge glut of oil, well over forecast for the past two weeks.

Earlier in the week, negative production reports from China, pushed the prices downwards but by midweek, positive market sentiment saw prices climb slightly, and then on Friday as Chinese data showed a drop in GDP, increased worries over Spain and a drop in consumer confidence in the US and a rise in inflation, markets backed off all commodities and moved to the safety of the USD. Oil fell to close the week at102.86, as is expected to continue to decline.

Date	Last	Open	High	Low	Change %
04/13/2012	102.86	103.84	103.89	102.61	-0.95%
04/12/2012	103.83	102.64	104.22	102.40	1.16%
04/11/2012	102.62	100.94	103.12	100.86	1.66%
04/10/2012	100.95	102.36	102.94	100.70	-1.37%
04/09/2012	102.34	102.19	102.59	100.83	0.16%

Historical:

High: 114.57

Low: 76.84

Major Economic Events for the past week actual v. forecast

Apr. 09	CNY	Chinese CPI (YoY)	3.6%	3.3%	3.2%
Apr. 10	USD	Fed Chairman Bernanke Speaks
JPY	Interest Rate Decision	0.10%	0.10%	0.10%
JPY	BoJ Press Conference
Apr. 12	CAD	Trade Balance	0.3B	2.0B	2.0B
USD	Trade Balance	-46.0B	-52.0B	-52.5B
USD	Initial Jobless Claims	380K	355K	367K
Apr. 13	CNY	Chinese GDP (YoY)	8.1%	8.3%	8.9%
USD	Core CPI (MoM)	0.2%	0.2%	0.1%
USD	CPI (MoM)	0.3%	0.3%	0.4%

Economic Events: (GMT)

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. All other PDF and HTML files are released to the Web site after 1:00 p.m. (Eastern Time) on Wednesday. Appendix D is produced during the winter heating season, which extends from October through March of each year. For some weeks which include holidays, releases are delayed by one day. (schedule)
• Heating Oil & Propane Update (October-March)
  Heating Oil, Propane Residential and Wholesale Price Data
  Release Schedule: Wednesday at 1:00 p.m. EST
• Weekly Coal Production
  Release Schedule: Thursday by 5:00 p.m. EST
• Weekly NYMEX Coal Futures
  Release Schedule: Monday by 5:00 p.m. EST
• Coal News & Markets
  Release Schedule: Monday by 5:00 p.m. EST
• Natural Gas Weekly Update
  Release Schedule: Thursday between 2:00 and 2:30 p.m. (Eastern Time)
• Weekly Natural Gas Storage Report
  Release Schedule: Thursday at 10:30 (Eastern Time) (schedule)

Originally posted here