US Crude Punches Above $37

US crude futures have posted gains on Monday, trading at $37.44 a barrel in the North American session. Brent crude futures are also higher, trading at $40.10, its highest level since early December. In economic news, there are just two minor US indicators on the schedule. The Labor Market Conditions Index came in at -2.4 points, its first decline since April 2015. Consumer Credit will be released later in the day.

The price of US crude continues to move higher and is currently trading at 8-week highs. This recovery has helped stabilize global markets and could lead to higher inflation, something sorely lacking in the US and other developed economies. Indeed, weak US inflation is one factor that weighs against the Fed raising interest rates later in March. However, all is not well for the commodity, as the recent rally could be short-lived. Morgan Stanley released a research note stating that a large portion of the recent improvement in oil prices was due to the deprecation of the US dollar, and warned that the huge oversupply of oil could again push prices lower.

In the US, Nonfarm Payrolls surged to 242 thousand in January, much higher than the estimate of 195 thousand. This marked an impressive jump from the previous reading of 171 thousand. The US economy has added an average of 225,000 jobs per month since December, an impressive number considering that the economy has softened in the early part of 2016. Still, employment news was mixed, as wage growth declined by 0.1%, shy of the estimate of a 0.2% gain. This marked the first drop in wages since December 2014. This indicator is closely linked to inflation, since an increase in wages means workers have more money to spend. The indicator’s decline underscores that that Federal Reserve’s inflation target of about 2.0% remains far off, so the Fed, which is keeping a close eye on the weak inflation picture, is unlikely to raise rates trigger at its policy meeting later this month.

WTI/USD Fundamentals

Monday (March 7)

  • 10:00 US Labor Market Conditions Index. Actual -2.1 points
  • 13:00 US FOMC Member Lael Brainard Speaks 
  • 13:00 US FOMC Member Stanley Fischer Speaks 
  • 15:00 US Consumer Credit. Estimate 16.8B 

*Key events are in bold

*All release times are EST

WTI/USD for Monday, March 7, 2016

WTI/USD March 7 at 11:50 EST

Open: 36.23 Low: 35.92 High: 37.40 Close: 37.44

WTI/USD Technical

S3 S2 S1 R1 R2 R3
30.00 32.22 35.09 37.75 40.00 43.45
  • WTI/USD was flat in the Asian and European sessions, and has posted gains in North American trade
  • 37.75 is a weak resistance line. It could break in the North American session
  • 35.09 is providing support

Further levels in both directions:

  • Below: 35.09. 32.22 and 30.00
  • Above: 37.75, 40.00 and 43.45

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.