WTI/USD – US Crude Steady, US Nonfarm Payrolls Ahead

US crude is showing little movement in the Thursday session. In North American trade, US crude futures are trading at $53.81. Brent crude futures are trading at $56.84, as the Brent premium has widened to $3.03. In the US, Unemployment Claims dropped to 241 thousand, beating the forecast of 251 thousand. US employment data will be in focus on Friday, as the US releases Nonfarm Payrolls, Average Hourly Earnings and the unemployment rate.

Another week, another surplus in US crude stockpiles. On Wednesday, Crude Oil Inventories soared, with a surplus of 6.5 million barrels. This was much higher than the estimate of 2.6 million. This marked a fourth straight surplus, each of which handily beat the market forecasts. US oil drilling has been on the increase, and more US production could offset the recent Russia/OPEC agreement which is aimed at reducing global oil supplies by some 2 percent. Analysts say that compliance by producers which signed the agreement has been high. This in itself is a noticeable achievement, given rampant cheating in previous OPEC agreements. Despite this, the agreement, which went into effect on January 1, has not led to higher oil prices one month later.

On Wednesday, the Federal Reserve opted to stay the course, leaving the benchmark interest rate at 0.50%. The Fed’s rate statement was upbeat about the economy and said that inflation continues to move towards the Fed’s target of 2 percent. Analysts expect the Fed to raise rates two or three times in 2017, with the odds of a rate hike by June priced in 70%. However, Donald Trump remains an enigma, as his economic policy remains unclear – Trump has promised substantial fiscal spending and tax cuts, but hasn’t provided any details. Just a few months ago, a red-hot economy had led to the Fed loudly hinting at gradual rate increases in 2017. However, with the markets showing increasing uneasiness about the new Trump administration, the Fed will likely change gears and adopt a wait-and-see attitude, watching what bills Trump gets through Congress and how the economy responds.

Trump On, Trump Off, Fed an Onlooker

WTI/USD Fundamentals

Thursday (February 2)

• 7:30 US Challenger Job Cuts. Actual -38.8%
• 8:30 US Unemployment Claims. Estimate 251K. Actual 246K
• 8:30 US Preliminary Nonfarm Productivity. Estimate 1.0%. Actual 1.3%
• 8:30 US Preliminary Unit Labor Costs. Estimate 2.3%. Actual 1.7%
• 10:30 US Natural Gas Storage. Estimate -82B

Upcoming Key Releases

Friday (February 3)

• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 170K
• 8:30 US Unemployment Rate. Estimate 4.7%
• 10:00 US ISM Nonfarm Manufacturing PMI. Estimate 57.0

*All release times are GMT

*Key events are in bold

WTI/USD for Thursday, February 2, 2017

WTI/USD February 2 at 11:25 EST

Open: 52.78 High: 53.69 Low: 52.64 Close: 53.44

WTI USD Technical

WTI/USD was flat in the Asian and posted slight gains in European trade. The pair has edged lower in North American trade

• 52.22 remains a weak support level
• 58.32 is the next resistance line
• Current range: 52.22 to 58.32

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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