US crude futures are subdued on Friday, trading at $34.73 a barrel in the European session. Brent crude futures are also very steady, trading at $37.06. In economic news, market focus will be on US job numbers, led by Nonfarm Payrolls. The markets are expecting a strong turnaround in the upcoming release, with an estimate of 195 thousand.
Crude oil prices are above $34 and are close to two-month highs. This is largely due to market sentiment that the crash in prices may have “bottomed out”, as crude has been climbing steady over the past three weeks. However, the huge surplus of crude continues to dwarf demand and may be with us for quite some time, which would weigh on the commodity. Perhaps underscoring this point, Crude Oil Inventories surged last week to 10.4 million, the largest surplus recorded in almost one year. Global demand for oil has decreased in recent months, sparked by the Chinese slowdown. The US economy has also softened, resulting in less demand for oil and exacerbating the tremendous collapse in oil prices.
All eyes are on the US Nonfarm Payroll release on Friday. This event is one of the most important economic indicators and any unexpected reading could have a strong impact on the currency and commodity markets. This week’s employment numbers have been mixed. ADP Nonfarm Payrolls improved to 214 thousand, crushing the estimate of 185 thousand. This was followed by a disappointing Unemployment Claims release, which missed expectations and climbed higher for a second straight week. Which direction will we see from the key NFP report? The markets are expecting a sharp rebound in July, with a forecast of 195 thousand, close to the important 200-thousand level. A strong reading could revive speculation about a March rate hike by the Federal Reserve, but such a scenario remains unlikely, barring a spectacular surge in employment and inflation indicators in the next two weeks, leading up to the Fed’s policy meeting. In the rosy days of December, when the Fed raised rates by 0.25%, there was talk of a series of hikes over the course of 2016, but the US economy has since softened, so another upward move by the Fed could be some time away.
Friday (March 4)
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 195K
- 8:30 US Unemployment Rate. Estimate 4.9%
- 8:30 US Trade Balance. Estimate -43.5B
*Key events are in bold
*All release times are EST
WTI/USD for Friday, March 4, 2016
WTI/USD March 4 at 3:00 EST
Open: 34.72 Low: 34.63 High: 34.88 Close: 34.73
- WTI/USD has been flat in the Asian and European sessions.
- 35.09 remains a weak resistance line which was tested on Thursday. It could see more action in Friday trade
- 32.22 is providing support
Further levels in both directions:
- Below: 32.22, 30.00, 26.64 and 22.88
- Above: 35.09, 37.75 and 40.00