Oil Prices Daily Outlook 6 June Oil prices started the week the same way they have ended the previous week, with moderate falls; the upcoming OPEC meeting will set up its oil production in 2011. Let’s examine the crude oil market for today, June 6th: Oil Prices – June 2011 On Friday, June 3rd, oil price (WTI) declined to $100.22 – a 0.18% decrease; during June so far the WTI decreased by 2.4%. Brent price also didn’t change much and inclined last week by 0.09% as it reached $115.90; during June Brent declined by 1.1%. Following the rapid fall of oil at the beginning of May, they have remained unchanged during most of the month up to date. The premium of Brent oil over WTI didn’t change much and reached on Friday, June 3rd $15.68/b. The chart below presents the changes of this premium during May and June 2011. Despite the rapid changes during May, this gap remained around the $13 to $16 during the last couple of weeks. The variance of this premium also seems to have declined during May compared with April. In the last three days of June, the premium remained nearly unchanged around the $15.5. US Dollar and Oil – June During May, the daily percent changes of US dollar compared with other major currencies were positively correlated with daily percent changes of oil prices, mainly Euros to USD and USD/CAD. On Friday June 3rd, the US dollar weakened against major currencies, probably due, in part, to the recent US Labor report, the Canadian dollar and the EURO by 0.92% and 0.47%, respectively. This change coincides with the decline in crude oil prices yesterday. If the US dollar will continue to strengthen against these currencies, this might further weaken the oil prices. SP500 and Oil – June update The stock market daily changes (SP500 index) also seem to coincide with the daily percent changes of major oil during May and June. The chart below shows the normalized (May 2nd =100) indexes of WTI, Brent oil and SP500 during May and June. As seen, all these indexes seem to have taken a similar course during May and June (up to date). This might indicate that the stock market movement and crude oil prices changes were positively correlated. Upcoming OPEC meeting on June 8th This week’s OPEC meeting on June 8th, in Vienna Austria will be around the Libyan war and whether or not OPEC will raise its reported oil production. Saudi Arabia is pushing to raise OPEC’s production due to the decline in Libyan oil production; according to Bloomberg Saudi Arabia will increase its oil production by 10% during this month. In regards to Libya, it’s likely that OPEC won’t pick a side – the rebels’ or Qaddafi’s, because it’s still not clear who will come up victorious at the end of the war. U.S. Ben’s speech- the Chairman of the Federal Reserve is set up to give a speech tomorrow about the economic outlook of the US economy. Following the recent publications of the economic indicators (PMI, Labor report GDP etc) showing the US economy isn’t recovering from its slowdown, it will be interesting to see what will Bernanke say in his speech, and whether he will tip his hand as to what is next for the Fed once the recent quantitative easing plan will end this month. Yemen Following the recent assassination attempt on current President Ali Abdullah Saleh by bombing his palace, he was taken to Saudi Arabia to treat his wounds. The turmoil in Yemen continues with no clear end in sight. Oil Price Outlook and Analysis: Oil prices continue to demonstrate moderate changes as the financial markets is probably waiting for new information that will point out the direction of oil prices. The U.S. labor report, which was published on Friday, implies that perhaps the Fed’s recent stimulus plan of the past several months didn’t do, for now, what it set out to do. i.e. jump start the US economy . This report, among other reports that also didn’t look well, might signal an upcoming decline in US demand for crude oil; if this will be the case, this might push down oil prices in the near future. Furthermore, as stated above the upcoming OPEC meeting, in which OPEC might decide to raise its oil quota, might further push down oil prices as the oil market will loosen. In the mean time, I still speculate that in the short term oil prices will remain at their current high prices around $100 per barrel for WTI and $115 for Brent oil

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