Oil Price Watch Archive

Here are two previous runs looking at how oil prices varied on a week by week basis. The "Issues" referred to below are outlined in the overview of the Oil Price Watch here

RUN 1: from July 15th 2006 to October 7th 2006.

Week ending July 15th 2006 The price of a barrel of Brent Crude oil had risen by 5% on the week and 27% on the year. Price at end of week: $78

Week ending July 22nd 2006 Last week traders were reported in the FT as predicting that oil would soon reach $80 a barrel, but instead it fell significantly - this despite conflict in the Middle East and comments from Iran about their nuclear ambitions, both of which could be expected to raise concerns about future supply disruptions. The major influence in the week? An unexpected increase in US oil stocks which helped allay market fears regarding future availability of supplies, reflecting both Issue 3 and 4 above. Price at end of week: $74.05

Week ending July 29th 2006 Renewed diplomatic pressures for a cease fire in Lebanon pushed the price down by a dollar on Tuesday while later in the week slower than expected US GDP growth also helped push prices down (both reflecting Issue 3 above). Countervailing influences that helped support the price included continuing conflict in the Middle East and Nigeria (Issue 3 above) included a larger than expected (heatwave induced) decline in US oil storages (Issues 3 and 4 above); "The storage fall was a major surprise and has the potential to spook the markets for a while" (George Hopley of Barclays Capital). Price at end of week: $73.78

Week ending August 5th 2006 The price of oil rose rapidly in the course of the week by almost $3 as hopes for a ceasefire in the Middle East faded, augmented by fears of supply disruptions due to a leak in Russias main pipeline to Europe, and a sabotage attack on a pipeline in Northern Iraq. Issue 3 again dominating the price of oil. Price at end of week: $76.63

Week ending August 12th 2006 The modest price fall during the week conceals a roller coaster ride for the price of oil, at one point hitting a record $78.10 on Monday after a pipeline leak forced BP to close down a major Alaskan oilfield. On Wednesday, concerns over "larger-than-expected" falls in stocks of oil led to price rises. Then fears that future air travel (and future demand for oil) would be hit after UK police foiled a suspected terrorist plot to blow up transatlantic airlines led to the oil price falling $2 on Thursday. Issues 3 and 4 again in evidence. Price at end of week:$75.77

Week ending August 19th 2006 A single story led to the price of oil falling by nearly 5% this week - that is, the ceasefire between Israel and Hizbollah appears to be holding, so fears that the conflict could further disrupt Middle East oil supplies is also on hold (Issue 3). Price at end of week:$72.04

Week ending August 26th 2006 Price rose by over a dollar Tuesday (due to fears Iran's nuclear ambitions will stir conflict with West), fell back by similar amount Wednesday (due to "surprise increase in US gasolone stocks"), then rebounded up by 66 cents mostly due to a faulty gas compressor reducing output in Prudhoe Bay, the largest oil field in North America. Issues 3 and 4 again influencing price, though Issue 2 (inelasticity) may also be cited as contributory reason for strong response to Prudhoe incident. Price at end of week:$73.49

Week ending September 2nd 2006 Price fell by nearly $4 a barrel through supply side influences (threat receding of hurricane disrupting oil supplies, and US inventories of oil reported unexpectedly high) and demand side influences (concerns about slowing US economy). Price at end of week:$69.67

Week ending September 9th 2006 Mostly one way traffic, with fears of sanctions on Iran receding, BP saying it hoped to return Prudhoe Bay to full production sooner than expected, the absence of hurricanes in the Gulf so far this year, and that familiar story of "larger than expected increases in US stockpiles" pushing down the price of oil to a five-month low. Expectations (of increased future supply) and stockpiles again driving price. Price at end of week:$65.99

Week ending September 16th 2006 ... and last week's supply-side driven story continues with OPEC further easing supply concerns on Monday by promising not to tighten quotas, and Iran saying it would suspend its nuclear work. The demand side enters the picture on Tuesday and reinforces the downwards trend after two influential bodies revised downwards their estimates of global oil demand growth for 2006 and 2007. Price at end of week:$61.64

Week ending September 23rd 2006... Price falls further with reports of comfortable levels of stockpiles of oil in US believed to be sufficient to cover any winter cold snap. By Wednesday of this week, crude oil prices had slumped to a six month low. FT also reports that there are signs of price stabilising above $60, and also signs that OPEC may try to control (quotas) on supply side to try to limit further price falls - but see Issue 5 above for more on this, and Article 39 in the Articles pages . Price at end of week:$59.11

Week ending September 30th 2006 The oil price has fallen by 20% since end of August. FT comments that oil price tends to fall when moving from summer when demand for petrol is strong, to autumn when demand is weaker; in the past two years oil prices have fallen about 20% over this period. On Tuesday there is still speculation that OPEC will try to cut quotas to boost price, but price fell anyway. Issue 5 above should again be noted here. Price at end of week almost unchanged: $59.74

Week ending October 7th 2006 Some competing and offsetting influences this week, for example reports of bigger-than-expected US stockpiles of oil (increasing expected future supply of oil) conflicting with reports that OPEC plannning production cutbacks (which would influence future oil supply in the opposite direction). There is an article on the front page of the FT Thursday October 5th which suggests that OPEC is set to agree a "voluntary " cut of 4% of crude oil production to try to shore up oil prices - the "voluntary" nature of the cuts indicative of Issue 5 above, with agreed production cuts difficult to make binding because of the free rider problem. And an editorial in the weekend FT also notes that "the price of oil is closely related to demand ... in the short run". So the fall in the price over the past few weeks may reflect continued weakness in global demand, which may in turn signal an "upcoming slowdown in economic activity across the industrialised world". So the fall in price may not be all good news. Price at end of week: $59.76

RUN 2: from February 17th 2007 to March 31st 2007.

The price of a barrel of Brent crude oil had started the year 2007 at $59.87, well down from a record high of $78.49 in August 2006. The FT noted that some analysts and forecasters thought it could reach $100 (but as I pointed out to an MBA class at UQ in the Spring of 2006, always look at who is making these forecasts and ask if it is in their interests to talk the price up). Prices retreated in the Autumn when it became apparent that the market was well supplied.

Week ending February 17th, 2007 The price had started the week at $58.64, cold weather in the US had increased demand while OPEC round of cuts had cut supply. But on Monday, prices had fallen more than $2 when the Saudi energy minister warned that OPEC might keep quotas unchanged when the cartel met again next month - Issue 3b above in so far as this new information may encourage traders to believe that prices may be lower in the near future than was previously thought to be the case. A report that falls in US stocks of oil were below expectations led to a further fall of $1 a barrel (Issue 3b and Issue 4 together). Counteracting these tendencies for prices to fall were reports of stronger than expected Chinese demand growth and fears of militant attacks in Nigeria choking off some future supplies (Issue 3a above). Price at end of week $58.08

Week ending February 24th, 2007 Forecasts of warmer weather for the US led to the price of a barrel falling nearly a dollar on Monday (Issue 3b) while on Wednesday, reports of a shut down of a 240,000 barrels a day refined products pipeline in Indiana due to a leak helped push prices back up (Issue 3a). By the end of the week, an unexpected drop in US stockplies and a rise in geopolitical tension with Iran digging its heels in over its nuclear programme (Issue 3a again) had led to oil surging back over the $60 mark. Price at end of week $61.18

Week ending March 3rd, 2007 The FT reports production cuts by OPEC and fears of an Iran/US standd off (supply curve moves left) and US oil demand running at record levels (demand curve moves right) so price moves up. Price at end of week $62.04

Week ending March 10th, 2007 The FT reports that because of OPEC cuts already announced, "markets have tightened and stockpiles fell in the US, the worlds largest oil producer". So supply curve has shifted left and price has rises already. But now "traders were .. factoring in no change to the production policies of (OPEC) which meets in Vienna next week". In other word, Issue 3 above, with fears of further supply cuts receding, which helps explain why the price of oil fell towards the end of the week. Price at end of week $61.22

Week ending March 17th, 2007 The FT reports that oil prices fell below $60 on Monday ahead of a meeting of OPEC which was expected to keep production policy unchanged in spite of the onset of spring, tradtionally a weak season for oil demand, as well as forecasts of abnormally warm weather in the US north-east (Issue 3b here), while a rally in price was cut back after OPEC confirmed decision to keep production policy unchaged. Price at end of week $60.98

Week ending March 24th, 2007 The price of oil shoots up by more than 3% in a week, partly because 15 British sailors may have lost their bearings. The sailors were captured by Iran who claimed they were in Iranian waters. The FT notes heightened international tensions, combined with US petrol demand increasing faster than expected, and declining stocks of oil in the developed world, have all contributed to the rise in price. Price at end of week $63.10

Week ending March 31st, 2007 The price of a barrel of Brent crude hit $69.14 before easing slightly but has still increased by more than $7 in two weeks. A rumour that conflict has started between the US and Iran led to prices shooting up by $5, then prices eased once the rumours were denied. All the Issue 3 type problems that had led to the price increase for week ending March 24th were still present this week, only with an added dose of hysteria. Price at end of week $68.17

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