US Crude Posts Gains, Markets Eye Crude Inventories Report

US crude futures have moved higher on Tuesday. US crude is trading at $41.10 per barrel in the North American session. Brent crude futures are trading at $43.93, as the Brent premium stands at $2.83. This is the highest level Brent crude has reached since early December 2015. In the US, there are no major events on the schedule. The NFIB Small Business Index beat expectations, while Import Prices missed the estimate. On Wednesday, the markets will be treated to three key releases – Core Retail Sales, Retail Sales and PPI.

US crude prices surged 10 percent last week and the upward move has continued, as crude prices are above the $41 level. We’ll get a look at the EIA crude inventory report on Wednesday, with the markets expecting a surplus of 1.0 million barrels. Last week’s reading showed a huge decline in crude stockpiles, which fueled last week’s sharp gains in crude prices. The markets are keeping a close eye on a meeting of oil producers in Doha, Qatar on Sunday. If the participants at the Doha gathering succeed in setting production limits, oil prices could stabilize. However, previous attempts to reach an agreement to cap output have failed. With many producers, including Iran, interested in ratcheting up production to increase oil revenues, it’s questionable whether we will see any dramatic breakthroughs at the Doha meeting.

The Federal Reserve has been in the spotlight in recent weeks, as hawkish statements from several Fed members had raised expectations about a rate hike in April. However, Fed chair Janet Yellen responded with a dovish assessment of the US economy, dampening such speculation. Last week, Yellen acknowledged that although domestic growth was steady, the US economy remained prone to risks due to turbulent conditions in the global economy. New York Federal Reserve president William Dudley reiterated Yellen’s message, saying that the Fed must approach future rate hikes with caution. As well, the Fed released the minutes of its March policy meeting last week, and the tone was more dovish than expected, although some members did express support for an April hike. The minutes also pointed to a split as to whether the recent pickup in inflation will continue. Higher inflation levels would increase the likelihood of a rate hike in June. Most analysts are expecting no more than two rate hikes in 2016, although stronger than expected economic data could change this forecast.

WTI/USD Fundamentals

Tuesday (April 12)

  • 6:00 US NFIB Small Business Index. Estimate 93.9. Actual 92.6
  • 8:30 US Import Prices. Estimate 1.0%. Actual 0.2%
  • 14:00 US Federal Budget Balance. Estimate -106.5B

Upcoming Key Events

Wednesday (April 13)

  • 8:30 US Core Retail Sales. Estimate 0.4%
  • 8:30 US PPI. Estimate 0.3%
  • 8:30 US Retail Sales. Estimate 0.1%
  • 10:30 US Crude Oil Inventories. Estimate 1.0M

WTI/USD for Tuesday, April 12, 2016

WTI/USD April 12 at 11:20 DST

Open: 40.36 Low: 40.10 High: 40.95 Close: 41.10

WTI/USD Technical

S3 S2 S1 R1 R2 R3
35.09 37.75 40.00 43.45 46.69 50.13
  • WTI/USD was flat in the Asian session and has posted gains in the European and North American sessions.
  • 40.00 is providing support
  • There is resistance at 43.45

Further levels in both directions:

  • Below: 40.00, 37.75, 35.09 and 32.22
  • Above: 43.45, 46.69 and 50.13

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.