US Crude Stockpiles Jump, Crude Price Remains Steady

US crude futures are steady on Wednesday, following strong gains in the Tuesday session. US crude is trading at $41.87 per barrel in the North American session. Brent crude futures are trading at $44.83, as the Brent premium has risen to $2.96. This is the highest level Brent crude has reached since the first week of December 2015. In the US, retail sales and PPI reports missed their estimates. The EIA Crude inventories posted a surplus of 6.6 million, much higher than the estimate. On Thursday, we’ll get a look at US consumer inflation reports.

US crude prices surged 10 percent last week and the upward move has continued, as crude prices are close to the $42 level. Crude oil prices have held steady on Wednesday, despite an EIA crude inventory report which showed a surplus of 6.6 million, crushing the surplus of 0.9 million barrels. This reading contrasted sharply with the previous release, which showed a strong decline. Moving to the international oil markets, oil producers will meet for an important meeting in Doha on Sunday. Participants at the Doha gathering will be looking to cap production limits and curb the huge worldwide glut of oil. However, previous attempts to reach an agreement to cut production 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.

It was a disappointing day for US releases. Core Retail Sales improved to 0.2%, but fell short of the forecast of 0.4%. Retail Sales surprised with a decline of 0.3%, shy of the estimate of a 0.1% gain. It marked the second straight drop for the indicator. Consumer spending represents the biggest part of the economy, so these figures could spell trouble at a time that the export sector remains soft due to weak global demand. PPI, a key gauge of inflation in the manufacturing sector, continues to struggle, posting a third decline in four months. The index dipped 0.1%, well off the estimate of a 0.3% gain. Will we see some relief from CPI on Thursday? The Fed, which has sent out a decidedly dovish message about the US economy, has greatly lowered expectations about a rate hike in April, and if CPI disappoints, the likelihood of a June move will decrease.

WTI/USD Fundamentals

Wednesday (April 13)

• 8:30 US Core Retail Sales. Estimate 0.4%. Actual 0.2%
• 8:30 US PPI. Estimate +0.3%. Actual -0.1%
• 8:30 US Retail Sales. Estimate +0.1%. Actual -0.3%
• 8:3o US Core PPI. Estimate +0.1%. Actual -0.1%
• 10:00 US Business Inventories. Estimate 0.1%. Actual -0.1%
• 10:30 US Crude Oil Inventories. Estimate 0.9M. Actual 6.6M
• 13:01 US 10-year Bond Auction
• 14:00 US Beige Book

Upcoming Key Events

Thursday (April 14)

• 8:30 US CPI. Estimate 0.2%
• 8:30 US Core CPI. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 270K

*Key events are in bold

*All release times are DST

WTI/USD for Wednesday, April 13, 2016

WTI/USD April 13 at 11:35 DST

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

WTI/USD Technical

• WTI/USD has shown limited movement during the day
• 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

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