US Crude Posts Gains, ADP Nonfarm Payrolls Beat Estimate

US crude is higher on Wednesday, as March futures are trading just above $30 a barrel in the North American session. Brent crude futures have also posted gains, and are currently trading at $33.85 per barrel. In economic news, ADP Nonfarm Payrolls slipped to 205 thousand, but beat expectations. ISM Non-Manufacturing PMI fell to 53.5 points, missing the forecast. We’ll get a look at Unemployment Claims on Thursday.

The huge oil glut is unlikely to improve anytime soon, as underscored by the most recent US Crude Oil Inventories report, which showed a surplus of 7.8 million, much higher than the estimate of 3.7 million. This was the second straight week that oil supplies were much higher than expected, and these readings will only increase worries that demand for oil products has weakened. Low oil prices continue to contribute to weak inflation levels, which remain well short of the Federal Reserve’s target of 2.0%.

US key releases were a mix on Wednesday. ADP Nonfarm Payrolls, which precedes the official NFP report later this week, dropped in January to 2015 thousand, compared to 257 thousand a month earlier. Still, this figure was better than the estimate of 193 thousand. Is the US economy in trouble? Elsewhere, the ISM Non-Manufacturing PMI dipped to 53.2 points in January. This marked the index’s worst showing since March 2014, but still points to expansion in the services industry. A robust US labor market in the second half of 2015 helped convince the Federal Reserve to raise interest rates in December, but employment numbers have been lukewarm in early 2016. Employment numbers will be closely monitored by the Fed, which will have to decide if the economy is ready for another rate hike in March. In the heady days following the Fed’s historic rate hike, there was talk of up to four rate hikes in 2016, but this appears unlikely, given current economic conditions and the collapse of oil prices.

WTI/USD Fundamentals

Wednesday (Feb. 3)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 193K. Actual 205K
  • 9:45 US Final Services PMI. Estimate 53.7 points. Actual 53.2 points
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 55.1 points
  • 10:30 US Crude Oil Inventories. Estimate 3.7M. Actual 7.8M

Upcoming Key Events

Thursday (Feb. 4)

  • 8:3o US Unemployment Claims. Estimate 279K

*Key releases are highlighted in bold

*All release times are EST

WTI/USD for Wednesday, February 3, 2016

WTI/USD February 3 at 11:25 EST

Open: 29.88 Low: 29.41 High: 31.69 Close: 31.54

WTI/USD Technical

S3 S2 S1 R1 R2 R3
22.88 26.64 30.00 32.22 35.09 37.75
  • WTI/USD was flat in the Asian session and posted slight gains in European trade. The pair continues to gain ground in the North American session.
  • The round number of 30.00 is under strong pressure in support. 26.64 is the next support line.
  • There is resistance at 32.22

Further levels in both directions:

  • Below: 30.00, 26.64 and 22.88
  • Above: 32.22, 35.09, 37.75 and 39.87

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.