WTI/USD – US Crude Steady as Markets Closed for New Year’s

US crude futures have edged lower in the Monday session. In North American trade, US crude is trading at $53.68. Brent crude futures are trading at $56.85, as the Brent premium stands at $3.17. On the release front, US markets are closed for New Year’s, so there are no events on the schedule. On Tuesday, manufacturing reports will be in focus, as the US publishes ISM Manufacturing PMI.

The Federal Reserve will be back on center stage on Wednesday, with the release of the minutes from the December policy meeting, when the Fed finally raised rates for the first time since December 2015. Analysts will be combing through the minutes, looking for clues as to the Fed’s future monetary policy. The US economy is performing very well, and the markets are hopeful that this continues as Donald Trump takes office. Trump’s economic policies remain sketchy, although he has promised to increase fiscal spending while lowering taxes. If the economy’s positive momentum continues in early 2017, the Fed could be inclined to raise rates another quarter point in order to prevent the economy from overheating. A rate hike would likely lead to broad gains for the US dollar.

Crude prices remain strong, as the recent agreement between OPEC and other oil exporters, which calls for production cuts, is expected to begin on January 1. Under the agreement, production is expected to drop by 1.8 million barrels per day. Saudi Arabia, OPEC’s largest producer, has agreed to bear most of the cuts in production. Compliance has long been a problem for OPEC, as many members have simply disregarded their production quotas, helping to sustain the global oversupply which production agreements are supposed to reduce. Even if oil exporters abide by their commitments under the deal, it’s questionable if crude prices will rise substantially, as US shale producers are likely to step in if oil prices move above the $60 level.

WTI/USD Fundamentals

Monday (January 2)

• There are no US releases on the schedule

Tuesday (January 3)

• 10:00 US ISM Manufacturing PMI. Estimate 53.7

WTI/USD for Monday, January 2, 2017

WTI/USD January 2 at 12:25 EST

Open: 53.96 High: 54.08 Low: 53.42 Close: 53.68

WTI USD Technical

• WTI/USD has shown limited movement in the Monday session
• 52.22 remains a weak support level
• 58.32 is the next resistance line

Further levels in both directions:

• Below: 52.22, 46.54, 40.57 and 33.22
• Above: 58.32, 65.05 and 72.99

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