WTI/USD – Oil Under Pressure as Markets Digest Trump Shocker

US crude prices have posted modest losses on Thursday, following roller-coaster volatility in the Wednesday session. In North American trade, WTI/USD futures are trading at $44.64. Brent crude futures are trading at $45.78, as the Brent premium has widened to $1.14.  On the release front, US unemployment claims dropped to 254 thousand, beating the estimate of 267 thousand. On Friday, the US will release UoM Consumer Sentiment. The indicator is expected to edge lower to 87.4 points.

 

The turmoil seen across global markets was triggered by the unexpected election victory of Donald Trump. In a tumultuous Wednesday session, the dollar displayed a whipshaw movement, as US crude prices plunged 6.2% before recovering. However, US crude prices are down on Thursday, as market jitters have eased. As well, an unexpected surplus in Crude Oil Inventories is also weighing on crude prices.

Hillary Clinton was widely expected to cruise to the White House, with almost all pundits confidently predicting that Trump had no chance of winning. Trump’s election victory, which has already been labeled the most stunning win in US election history, sent shock waves across global markets. As the dust begins to settle after the election, it is already apparent that global markets were poorly positioned heading into the vote, overconfident that voters would reject Trump and hand Clinton a victory.

The Trump election victory also shook up the odds of a December rate hike by the Federal Reserve. The odds dropped as low as 40 percent earlier in the day, but recovered and surged to 76 percent. Currently, the odds are back at 71 percent, the same level they were at just before the election. Despite this recent volatility, it’s looking quite positive for a rate hike, which would mark the first rate move by the Fed since last December. Meanwhile, the markets will be watching to see if Fed chair Janet Yellen can work with President-elect Trump. During the election campaign, Trump harshly criticized Yellen, saying she was “too political”. If Yellen were to choose to resign, the shock waves will be sure to affect the US dollar.

OPEC Deal Becomes More Urgent

 

WTI/USD Fundamentals

Thursday (November 10)

  • 8:30 US Unemployment Claims. Estimate 267K. Actual 254K
  • 9:15 US FOMC Member James Bullard Speaks
  • 19:30 US Natural Gas Storage. Estimate 53B. Actual 54B
  • 13:01 US 30-year Bond Auction
  • 14:00 US Federal Budget Balance. Estimate -81.9B

Friday (November 11)

  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 87.4

*All release times are EDT

*Key events are in bold

WTI/USD for Thursday, November 10, 2016

WTI/USD November 10 at 12:45 EDT

Open: 45.10 High: 45.63 Low: 44.42 Close: 44.64

WTI USD Technical

S3 S2 S1 R1 R2 R3
28.71 33.22 40.57 46.54 52.22 58.32
  • WTI/USD posted slight losses in the Asian session. The pair was choppy in the European session and has posted slight losses in North American trade
  • 40.57 is providing support
  • 46.54 remains a weak resistance line

Further levels in both directions:

  • Below: 40.57, 33.22 and 28.71
  • Above: 46.54, 52.22 and 58.32

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.