WTI/USD – US Crude Dips Lower, Crude Inventories Next

Oil prices have ticked lower on Tuesday session, following four straight winning sessions. In North American trade, WTI/USD futures are trading at $50.80. Brent crude futures have climbed to $53.96, as the Brent premium stands at $3.16. In the US, there are no major events on the schedule. The trade deficit widened to $42.6 billion, above the forecast of $41.5 billion. IBD/TIPP Economic Optimism, a consumer confidence indicator, improved to 54.8, beating the estimate of 52.3. On Wednesday, we’ll get a look at Crude Oil Inventories.

The spotlight was on US employment numbers on Friday and the readings were mixed. Nonfarm Payrolls improved to 178 thousand, edging above the forecast of 177 thousand. This marked a 4-month high. However, Average Hourly Earnings, which measures wage growth, surprised with a decline of 0.1%, short of the estimate of 0.2%. This was the first decline in wage growth since March. The unemployment rate dropped to just 4.6%, well below the forecast of 4.9%. The decrease in labor market slack is likely to put more pressure on inflation levels, which remain weak despite a strong economy. Preliminary GDP expanded at a clip of 3.2% in the third quarter, beating the estimate of 3.0%.

US crude levels remains at high levels. Crude enjoyed a stellar week, skyrocketing 13.8 percent against the US dollar. Oil prices surged as OPEC made good on its promise to reach an agreement to cut production levels. The deal caught the markets by surprise, as most analysts had expected the usual ending of an inconclusive meeting. Saudi Arabia agreed to allow to Iran to maintain production at pre-sanction levels, paving the path for OPEC’s first agreement since 2008. The deal is intended to reduce the worldwide glut of oil and stabilize oil prices. However, OPEC members have cheated on their production quotas in the past, and the cartel will be hard-pressed to enforce the agreement. As well, US shale producers could step in and ratchet up production, which could trigger lower crude prices.

OPEC Output Set Record High Ahead of Cut

WTI/USD Fundamentals

Tuesday (December 6)

  • 8:30 US Revised Nonfarm Productivity. Estimate 3.2%. Estimate 3.1%
  • 8:30 US Trade Balance. Estimate -41.5B. Actual -42.6B
  • 8:30 US Revised Unit Labor Costs. Estimate 0.4%. Actual 0.7%
  • 10:00 US Factory Orders. Estimate 2.5%. Actual 2.7%
  • 10:00 US IBD/TIPP Economic Optimism. Estimate 52.3. Actual 54.8

Wednesday (December 7)

  • 10:30 US Crude Oil Inventories

*All release times are EST

*Key events are in bold

WTI/USD for Tuesday, December 6, 2016

WTI/USD December 6 at 11:30 EST

Open: 51.25 High: 52.41 Low: 51.07 Close: 51.92

WTI USD Technical

S3 S2 S1 R1 R2 R3
33.22 40.57 46.54 52.22 58.32 65.05
  • WTI/USD was flat in the Asian and European sessions. The pair has posted small losses in North American trade
  • 46.54 is providing support
  • 52.22 was breached earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 46.54, 40.57, 33.22 and 26.06
  • Above: 52.22, 58.32 and 65.05

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.