Crude Oil Flat as US Markets Closed for Holiday

US Crude is quiet on Thursday, after showing strong volatility a day earlier. In the European session, oil is trading at $42.91 a barrel. US markets are closed for Thanksgiving, so we can expect crude to continue to have an uneventful day.

The US released several key releases on Wednesday, to mixed reviews. Unemployment Claims plunged to 260 thousand, well off the estimate of 273 thousand. There was more good news from Core Durable Goods, which rebounded with a strong gain of 0.5%, matching the forecast. UoM Consumer Sentiment improved to 91.3 points, but the markets were overly optimistic, as the estimate stood at 93.2 points. This consumer confidence indicator comes on the heels of CB Consumer Confidence, which dropped to 90.4 points, nowhere close to the estimate of 99.3 points. These weak consumer confidence readings could raise concerns, as soft consumer confidence numbers could translate into weaker consumer spending, which is a key driver of economic growth.

With oil supplies continuing to far outstrip global demand, oil prices remain stuck at their lowest levels since August. Despite the continuing glut, Saudi Arabia and other OPEC members appear determined to maintain current production levels, determined to hold onto their market share. If this situation continues, we could see oil drop below $30 a barrel as early as next year. The markets will be keeping a close eye on the OPEC meeting on December 4th. It’s doubtful that oil prices will move much higher before then. As well, the economic slowdown in China and other emerging countries continues to have a negative impact on global commodity prices, including oil.

Will the Federal Reserve press the rate trigger at the December policy meeting? Last week’s Fed minutes did not confirm a December rate hike, but most analysts feel that the long-awaited move will indeed occur next month. The Fed hinted at a rate hike in its October policy statement, and the markets have been abuzz ever since. Last week, New York Fed President William Dudley said there is a “strong case” for a rate hike in December as long as economic data remains strong. With the US economy showing improvement and employment and consumer indicators pointing upwards, the markets appear prepared for a small hike of 0.25% or 0.50%, and there is a growing view that modest, incremental moves would not cause unwanted turbulence on the global markets. One fly in the ointment is that of weak inflation levels, as the Fed has repeatedly stated that inflation is a key consideration in any decision to raise rates. With the critical Fed meeting only a few weeks away, every key indicator and comment from a Fed member will be under close scrutiny from the markets.

WTI/USD Fundamentals

• All Day – US Bank Holiday

WTI/USD for Thursday, November 26, 2015

WTI/USD November 26 at 12:10 GMT

WTI/USD 42.91 H: 43.28 L: 42.72

XAU/USD Technical

• WTI/USD was flat in the Asian and European sessions.
• 44.30 is a strong resistance line.
• 42.59 remain busy and has switched to a support role.

Further levels in both directions:

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

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