WTI pricing: first half 2010
Prices for all major global benchmark crudes rose gradually but steadily during late January through the end of April. The bullish trend pushed WTI prices to a weekly average of $84.10 per barrel during the week of April 26. The bullish trend ended abruptly in early May and prices fell almost $15.00 per barrel (about 18%) during the first three weeks of May. We note that fundamental considerations became increasingly bearish (rising inventories in the U.S. and at Cushing, OK and rising U.S. crude oil production) during the 3 month bullish trend but the market clearly ignored bearish fundamentals until early May. Our evaluation led us to conclude that other factors tipped crude oil prices into a bearish trend.
Crude traders with a financial/currency trading orientation generally have a bullish view of WTI prices when the Euro strengthens against the USD. This trend in the currency markets came to an abrupt end when the Greek financial crisis threatened to push the European Union into crisis. During the first half of May Euro values dropped relative to the USD. During this period, prices for WTI as well as other major benchmarks fell sharply.The bearish correction ran its course within three weeks and a modest recovery boosted WTI prices to almost $80.00 per barrel before the end of June. Fundamentals for all global benchmarks, however, became increasingly bearish. Control of price trends is likely to swing between financially oriented traders and fundamental traders for the next six to twelve months.
Will the bearish bias continue to dominate trends in crude oil price trends for the remainder of 2010?
We answer these and many other questions about crude oil and refined products for clients who subscribe to NGL Markets in North America.
