WTI/USD – Crude Dips, Recovers as Crude Stockpiles Jump

US crude continues to hug the $50 level in the Thursday session. In North American trade, WTI/USD futures are trading at $50.40 per barrel. Brent futures are trading at $52.10, as the Brent premium stands at $1.70. On the release front, unemployment claims had another excellent showing, dropping to 246 thousand.

US crude is showing some volatility on Thursday, following an unexpectedly large surplus in crude stockpiles. Crude Oil Inventories showed a gain of 4.9 million barrels, crushing the estimate of just 0.4 million. The reading was the highest since April, and ended a streak of five straight declines. US crude climbed 4.0% on Monday (above the $51 level), after Russian president Vladimir Putin stated that Russia would join the OPEC agreement to cap production levels. OPEC members surprised the markets in late September when they reached a tentative agreement to put a ceiling on production levels in order to stabilize oil prices. OPEC has called on other exporters to join the agreement, and having the backing of Russia will be an important step towards reaching a final agreement, slated for next month. At the same time, oil producers have not been able to bridge their differences in the past, so there is certainly room for doubt that an agreement will be reached.

On Wednesday, the Federal Reserve released the minutes of its last policy meeting. The minutes contained no dramatic news, but point to deep divisions in the FOMC over monetary policy. This was already apparent in the September rate vote, when three members voted against the decision to maintain rates at 0.25 percent. The minutes indicated that some of the members who voted to hold rates chose to fall in line with Janet Yellen, but are in favor of raising rates “relatively soon”. This means that Yellen will face a tough battle if she wants to hold off a rate in December, given that there is significant support for rate hike in December. The markets have priced in a December hike at 66 percent and the positive sentiment could help the US dollar continue to move higher. The Fed will next meet in November, but analysts don’t expect a move just a week before the presidential election.

WTI/USD Fundamentals

Thursday (October 13)

  • 8:30 US Unemployment Claims. Estimate 252K. Actual 246K
  • 8:30 US Import Prices. Estimate 0.1%. Actual 0.1%
  • 10:30 US Natural Gas Storage. Estimate 84B
  • 11:00 US Crude Oil Inventories. Estimate 0.4M. Actual 4.9M
  • 13:01 US 30-year Bond Auction

Friday (October 14)

  • 12:30 US Core Retail Sales. Estimate 0.4%
  • 12:30 US PPI. Estimate 0.2%
  • 12:30 US Retail Sales. Estimate 0.6%
  • 14:00 US Preliminary UoM Consumer Sentiment. Estimate 92.1
  • 17:30 US Federal Chair Janet Yellen Speaks

*All release times are EDT

*Key events are in bold

WTI/USD for Thursday, October 13, 2016

WTI/USD October 13 at 13:00 EDT

Open: 49.89 High: 50.66 Low: 49.37 Close: 50.40

WTI USD Technical

S3 S2 S1 R1 R2 R3
43.45 46.69 50.13 53.50 59.69 65.49
  • WTI/USD was flat in the Asian session. The pair has posted gains in the European session and has shown some volatility in North American trade
  • 50.13 is under strong pressure in support
  • There is resistance at 53.50

Further levels in both directions:

  • Below: 50.13, 46.69, 43.45 and 38.38
  • Above: 53.50, 59.69 and 65.49

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.