WTI/USD – US Crude Subdued as Markets Eye Fed Rate Statement

US crude continues to have an uneventful week. In the North American session, WTI/USD futures are trading at $43.81 per barrel. Brent futures are trading at $46.20, as the Brent premium stands at $2.61. In economic news, there were only two releases on the schedule. Housing Starts and Building Permits both came in at 1.14 million, short of expectations. On Wednesday, the Federal Reserve will set interest rates and release a monetary policy statement. As well, the weekly EIA Crude Oil Inventories report will be released. The indicator has pointed to two straight drawdowns, but the drop in supply hasn’t propped up crude prices.

With the continuing oversupply of crude weighing on oil prices, there is a sense of urgency among oil producers to cap production in order to stabilize prices. Major oil producers will meet next week in Algiers, and Venezuelan President Nicolas Maduro said that OPEC and non-OPEC countries were “close” to reaching a deal. However, previous summits have ended without any agreement on a production freeze, and there is a great deal of skepticism that things will be any different this time around.

All eyes will be on the Federal Reserve on Wednesday, as the bank will set interest rates and release a policy statement. Janet Yellen delivered an upbeat speech back in August, and the predictable result was increased speculation about a rate hike as early as September. However, recent economic numbers have been mixed, so the Fed is widely expected to remain on the sidelines at the Wednesday meeting and revisit monetary policy in December. The markets have priced in a September hike at just 12 percent. Still, the Fed policy statement will be closely monitored by the markets, which will be looking for hints regarding a December move. If Janet Yellen delivers a dovish message, the market’s mood could sour and the dollar could lose ground. Recent comments from FOMC members, which have been almost contradictory at times, have left the markets confused and reinforced the perception that the Fed remains divided regarding its near-future monetary policy. With the markets expecting a rate hike in the near future, greater clarity from the Fed about its monetary policy plans could contribute to market stability and bolster the US dollar.

WTI/USD Fundamentals

Tuesday (September 20)

  • 8:30 US Building Permits. Estimate 1.17M. Actual 1.14M
  • 8:30 US Housing Starts. Estimate 1.19M. Actual 1.14M

Wednesday (September 21)

  • 10:30 US Crude Oil Inventories
  • 14:00 FOMC Economic Projections
  • 14:00 FOMC Federal Funds Rate. Estimate >0.50%
  • 14:30 FOMC Press Conference

*Key events are in bold

*All release times are EDT

WTI/USD for Tuesday, September 20, 2016

WTI/USD September 20 at 11:15 EDT

Open: 43.72 High: 44.15 Low: 43.26 Close: 43.86

WTI USD Technical

S3 S2 S1 R1 R2 R3
32.33 38.38 43.45 46.69 50.13 53.50
  • WTI/USD was flat in the Asian session. The pair posted small losses in the European session and has rebounded with sharp losses in  North American trade
  • 43.45 was tested earlier in support and remains a weak line. It could break in the North American session
  • There is resistance at 46.49

Further levels in both directions:

  • Below: 43.45, 38.38 and 32.33
  • Above: 46.69, 50.13, 53.50 and 59.69

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.