WTI/USD – US Crude Jumps on Hopes of OPEC Deal

US crude prices have posted strong gains on Tuesday. In North American trade, WTI/USD futures are trading at $45.11. Brent crude futures are trading at $46.16, as the Brent premium has narrowed to $1.05. On the release front, Retail Sales and Core Retail Sales posted identical gains of 0.8 percent, as both indicators beat their estimates. The Empire State Manufacturing Index gained 1.5 points, beating the forecast of -1.5. On Wednesday, the US will publish PPI.

US crude has rebounded sharply since Monday, when the commodity fell as low as $42, its lowest level since August. The Trump election win has caused turmoil in the markets and sent oil prices lower, and unexpectedly large surplus in US crude inventories have also weighed on crude prices. Meanwhile, OPEC members are trying to drum up support for a cap agreement to stabilize oil prices. Although there is skepticism that the cartel will reach an agreement, Qatar, Algeria and Venezuela are working behind the scenes to reach a consensus. OPEC members will meet in Vienna in November 30. If the cartel fails to reach an agreement, the slide could continue and oil prices could fall as low as $35 a barrel. On Friday, OPEC said its output hit a record 33.64 million barrels per day in October.

With the Federal Reserve setting interest rates in less than a month, expectations are high that the Fed will press the trigger and raise rates by a quarter-point for the first time in a year. There have been several false starts before, but this time should be different. The Fed has sent out strong signals that it will raise rates in December, and in the past two rate decisions, some FOMC members voted for an immediate rate hike. The odds of a rate rise currently stand at an impressive 86 percent, so barring some sudden negative data, we appear headed for a rate hike before the end of 2016.

WTI/USD Fundamentals

Tuesday (November 15)

• 8:30 US Core Retail Sales. Estimate 0.5%. Actual 0.8%
• 8:30 US Retail Sales. Estimate 0.6%. Actual 0.8%
• 8:30 US Empire State Manufacturing Index. Estimate -1.5. Actual 1.5
• 8:30 US Import Prices. Estimate 0.4%
• 9:05 US FOMC Member Daniel Tarullo Speech
• 10:00 US Business Inventories. Estimate 0.2%
• 13:30 US FOMC Member Stanley Fischer Speech

Wednesday (November 16)

• 8:30 US PPI. Estimate 0.3%

*All release times are EST

*Key events are in bold

WTI/USD for Tuesday, November 15, 2016

WTI/USD November 15 at 11:30 EST

Open: 43.74 High: 45.31 Low: 43.65 Close: 45.11

WTI USD Technical

• WTI/USD has posted steady gains in the Tuesday session
• 40.57 is providing support
• 46.54 is 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

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