Oil prices finished the week on a positive note along with the rest of the markets such as the American stock markets. The positive reports that were in published in the U.S. during last week including theU.S. labor report andU.S consumer confidence survey may have helped push up the markets including the oil market. The recentdevelopment vis-à-vis the sanctions on Iran may also affect the oil market in the weeks to come. Thereare several reports that will be published during the upcoming week that may affect not only the stock and forex markets, but also energy markets including: U.S. trade balance report, ECB rate decision, China's inflation rate and EU summit.

On Friday, December 2nd oil price (WTI) slightly inclined by 0.76% to $100.96/b; Brent also slightly inclined by 0.91% to $1110.35/b; during last week WTI increased by 2.80% and Brent inclined by 0.91%.

The chart below shows the development of WTI and Brent during November (prices are normalized to October 31st).

Premium of Brent over WTI –Update

The premium of Brent over WTI slightly declined during last week and reached on Friday to $9.39. During November the premium fell by 32.88%.

In a recent post I refer to the change in the difference of Brent oil and WTI oil price.

Oil Stocks – Rose Last Week

U.S.Petroleum stockpiles changed direction and rose last week by 7.6 million barrels to reach 1,740.41 million barrels. Theoil stocks are still below the quota from last year by 92,238 million barrels. The new report will be published on Wednesday, December 7th.

Forex and Oil

TheEURO/USD slightly inclined during last week by 0.5%; this upward trend breaks the depreciation of the Euro against the USD in recent weeks; the same goes to other currencies. If the USD will continue to depreciate against the Euro, this may also affect oil to trade up.

U.S. Stock / Oil

The S&P500 sharply inclined during last week by 4.34% to reach 1,244 on Friday; during recent months there was a strong positive correlation between oil and S&P500 (e.g. during November the correlation with WTI was 0.510 and with Brent 0.610).

If the American stock markets will continue to rally as they did during last week, this upward trend might also pressure oil prices to rise.

Oil Price Analysis:

Oil ended last week rising. The recent development in the Middle East may continue to play a role in the development in oil prices and if there will be new speculations or developments of another escalation in the region mainly Iran, this could pressure oil to rise. On the other hand from the demand side, the recent positive reports from the U.S. includingthe positive labor report, themanufacturing PMI, theconsumer confidence survey and thepending home sales report helped rally the markets including the stock markets and consequently also helped push up oil prices.

If the U.S. will continue to show improvement and the EU countries will also start to show growth, this could also help oil to rise.

The forex market will probably continue affecting the development of oil as analyzed above.

I speculate that during the upcoming week, WTI will revolve around $99-$105 mark and Brent around $108-$115.

For further reading:

Gold and Silver Prices Weekly Outlook December 5-9

Natural Gas Prices Outlook for December 2011

Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.

By: Lior Cohen, Energy Analyst forTrading NRG