US Crude on Hold Ahead of FOMC Minutes

US crude is almost unchanged on Wednesday, as crude trades at $48.35 per barrel in the North American session. Brent crude is trading at $49.52, as the Brent premium stands is steady at $1.17. In economic news, Crude Oil Inventories posted a gain of 1.3 million, much higher than expectations. Later in the day, the Federal Reserve will release the minutes of its April policy meeting. On Thursday the US will release Unemployment Claims and the Philly Fed Manufacturing Index.

Crude Oil Inventories surprised the markets on Wednesday, posting a gain of 1.3 million. The markets had expected a sharp decline of 3.2 million. US crude shrugged off the release, as the commodity continues to trade above the $48 level. Crude Oil Inventories, released weekly, have posted declines only twice since February, as US crude stockpiles remain at high levels. Oil prices have nonetheless remained high, in large part a result of production problems such as the massive wildfire in Alberta earlier this month.

All eyes will be focused on the Federal Reserve on Wednesday, with the release of the April minutes. The Fed has sent out the message that a June hike is on the table, but the markets remain skeptical, especially after the weak Nonfarm Payrolls report earlier this month. With the economy showing mixed employment numbers and inflation stuck at low levels, a June hike would be nothing less than a shock, a reason in itself for the Fed to remain on the sidelines. The Fed insists that June will be a “live meeting”, meaning that it will carefully weigh the possibility of a rate hike. The markets don’t seem to be buying into this message, clearly expecting rates to remain at the current level of 0.25%, with the implied probability of a hike down to just 4%. The upcoming minutes could provide some insight as to whether the Fed is considering a move at the June meeting.

 

WTI/USD Fundamentals

Wednesday (May 18)

  • 10:30 US Crude Oil Inventories. Estimate -3.1M. Actual 1.3M
  • 14:00 US FOMC Meeting Minutes

Upcoming Key Events

Thursday (May 19)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 3.2
  • 8:30 US Unemployment Claims. Estimate 276K

*Key events are in bold

*All release times are EDT

 

WTI/USD for Wednesday, May 18, 2016

WTI/USD May 18 at 11:30 EDT

Open: 47.86 Low: 47.54 High: 48.41 Close: 48.10

WTI/USD Technical

S3 S2 S1 R1 R2 R3
40.00 43.45 46.69 50.13 53.50 56.79
  • WTI/USD has showed limited movement in the Wednesday session
  • There is resistance at 50.13. This line has held firm since October 2015
  • 46.69 is providing support

Further levels in both directions:

  • Below: 46.69, 43.45, 40.00 and 37.75
  • Above: 50.13, 53.50 and 56.79

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.