WTI/USD – US Crude Slide Continues as Crude Inventories Surge

US crude is looking at a fourth straight losing session, as WTI/USD continues to slide. In North American trade, the pair is trading at $45.28 per barrel. Brent futures are trading at $46.63, as the Brent premium has narrowed to at $1.35. On the release front, ADP Nonfarm Employment dropped to 147 thousand, well short of the estimate of 166 thousand. Later in the day, the Federal Reserve concludes its policy meeting and is expected to maintain the benchmark interest rate at 0.25 percent. On Thursday, the US releases unemployment claims and the ISM Non-manufacturing PMI.

It’s been a rough ride for US crude, which has slumped 12.5 percent since October 20, when crude was trading close to $52. Oil prices have been falling as the OPEC agreement to cap production is in doubt, with Iran and other members voicing opposition to limits on their oil production. US crude has dropped 2.5 percent on Wednesday, after Crude Inventories surprised the markets with a huge surplus of 14.4 million. The markets had predicted a gain of just 1.6 million. US crude is currently trading at its lowest level since the end of September.

The Federal Reserve is in the spotlight, as the bank concludes a 2-day policy meeting on Wednesday. The markets are expecting the Fed to remain on the sidelines, given that the US presidential election takes place next week. The rate statement will be carefully monitored, as analysts comb for hints about the extent of support among FOMC members ahead of the crucial December meeting. There was positive news from the US consumer front on Monday, as Personal Spending rebounded with a 0.5% gain in September, after a flat reading of 0.0% in August. Gold responded to the reading with slight losses. This release comes on the heels of a disappointing consumer spending report on Friday, as UoM Consumer Sentiment fell to 87.2 points in October, below expectations and dropping to its lowest level since August 2015.

WTI/USD Fundamentals

Wednesday (November 2)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 166K. Actual 147K
  • 10:30 US Crude Oil Inventories. Estimate 1.6M. Actual 14.4M
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <0.50%. Actual <0.50%

Upcoming Key Events

Thursday (November 3)

  • 8:30 US Unemployment Claims
  • 8:30 US ISM Non-manufacturing PMI. Estimate 56.2 points

*All release times are EDT

*Key events are in bold

WTI/USD for Wednesday, November 2, 2016

WTI/USD November 2 at 12:20 EDT

Open: 46.45 High: 46.45 Low: 44.97 Close: 45.28

WTI USD Technical

S3 S2 S1 R1 R2 R3
33.22 38.38 43.45 46.69 50.13 53.50

WTI/USD was flat in the Asian session. The pair posted slight losses in the European session and the downward movement has continued with sharp losses in North American trade

  • 43.45 is providing support
  • 46.69 is a weak resistance line

Further levels in both directions:

  • Below: 43.45, 38.38 and 33.22
  • 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.