Oil Slide Continues, Unemployment Claims Unchanged at 276K

WTI crude continues to lose ground this week. At the start of the North American session on Thursday, oil is trading at $42.34. In economic news, the markets are focused on US employment numbers. Unemployment Claims was unchanged at 276 thousand, disappointing the markets. Later in the day, we’ll get a look at JOLT Job Openings, with an estimate of 5.39 million. Traders should be prepared for volatility on Friday, as the US releases Retail Sales, PPI and UoM Consumer Confidence.

Meanwhile, oil prices continue to head south, as oil has recorded a daily loss for seven straight days. Crude oil touched the $50 level in mid-October, but has struggled since then, with the price of a barrel at just $42, its lowest level since August. With China and other emerging markets gripped by an economic slowdown, the demand for oil has softened. This means that prospects of a rise in oil prices in the short-term appear remote. However, that could change if the Federal Reserve raises rates next month, as such a dramatic move would mark a strong vote of confidence in the US economy, and positive market sentiment could translate into actual economic growth which would increase the demand for oil and raise oil prices.

The Fed policy statement was unexpectedly hawkish in October, and this has understandably fueled market speculation about a rate hike in December. At the same time, the Fed has been split over a rate hike for quite some time, and many members will be hesitant to vote in favor of raising rates unless they are confident that the US economy can withstand an interest rate hike. Employment numbers out of the US have certainly improved, with recent indicators such as the unemployment rate pointing to close to full employment in the US economy. At the same time, other indicators have not fared as well, particularly manufacturing data and inflation levels. While a rate hike in December is back on the front burner, it is by no means a done deal, making for plenty of speculation on the part of market players in the next several weeks regarding a possible move by the Fed.

WTI/USD Fundamentals

Thursday (Nov. 12)

• 13:30 US Unemployment Claims. Estimate 270K. Actual 276K.
• 14:30 US Federal Reserve Chair Janet Yellen Speaks
• 15:00 US JOLTS Openings. Estimate 5.39M
• 15:15 US FOMC Member Charles Evans Speaks
• 16:00 US Crude Oil Inventories. Estimate 0.8M
• 15:15 US FOMC Member William Dudley Speaks
• 18:01 US 30-year Bond Auction
• 19:00 US Federal Budget Balance. Estimate -130.2B
• 23:00 US FOMC Member Stanley Fischer Speaks

Upcoming Key Events

Friday (Nov. 13)

• 13:30 US Core Retail Sales. Estimate 0.4%
• 13:30 US PPI. Estimate 0.2%
• 13:30 US Retail Sales. Estimate 0.3%
• 15:00 US Preliminary UoM Consumer Sentiment. Estimate 91.3 points

*Key releases are highlighted in bold

*All release times are GMT

WTI/USD for Thursday, November 12, 2015

WTI/USD November 12 at 13:25 GMT

WTI/USD 42.53 H: 43.52 L: 42.47

XAU/USD Technical

• WTI/USD was flat in the Asian session and has posted slight losses in European trade.
• 39.87 is providing support.
• 42.59 has switched to a resistance role as oil continues to weaken.

Further levels in both directions:

• Below: 39.87 and 37.75 and 35.09
• Above: 42.59, 44.30, 47.04 and  49.06

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.