West Texas Crude Dips as US GDP Misses Estimate, Markets Await Trump Speech

West Texas crude has recorded losses in the Tuesday session. In North American trade, WTI crude futures are trading at $53.35. Brent crude futures are trading quietly at $55.80, as the Brent premium has increased to $2.45. On the release front, revised GDP remained at 1.9%, shy of the forecast of 2.1%. The CB Consumer Confidence report jumped to 114.8, well above the estimate of 111.1 points. As well, President Donald Trump will address a joint session of Congress. On Wednesday, the US releases Manufacturing PMI.

It’s show time for Donald Trump later on Tuesday. The president delivers his first speech before Congress, and the speech could have huge ramifications for the financial markets. Since Trump’s stunning election upset, the stock markets are sharply higher, but the markets will be expecting some details about Trump’s economic agenda. Trump recently promised to unveil a “phenomenal” tax reform package and significant spending on infrastructure, but hasn’t provided any details. Tuesday’s speech marks a critical opportunity for the new administration, which is still trying to find its bearings after a rocky first month. If Trump fails to present specifics in terms of numbers or at least provide some timelines, market sentiment will likely sour and this could hurt the US dollar.

WTI crude continues to drift between the $52-$54 range, where it has hovered since mid-December. Crude has been unable to push higher, as US Crude Inventories continue to post surpluses. Last week, the indicator posted a seventh consecutive surplus, but the reading of 0.6 million barrels was much smaller than expected and marked the second weakest reading in 2017. This was in sharp contrast to the previous reading of 9.5 million. The string of gains underscore a sharp increase in US shale drilling, which has offset the recent OPEC-Russia agreement, which lowered production and was supposed to raise oil prices. The OPEC-Russia deal came into effect on January 1, and although compliance has been very high, oil prices have risen only marginally since the start of the year.

Trump Speech Could Make or Break the Market Rally

WTI/USD Fundamentals

Tuesday (February 28)

• 8:30 US Preliminary GDP. Estimate 2.1%. Actual 1.9%
• 8:30 US Goods Trade Balance. Estimate -66.0B
• 8:30 US Preliminary GDP Price Index. Estimate 2.1%
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.5%.
• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.3%
• 9:45 US Chicago PMI. Estimate 53.2
• 10:00 US CB Consumer Confidence. Estimate 111.1. Actual 114.8
• 10:00 US Richmond Manufacturing Index. Estimate 10
• 19:01 British BRC Shop Price Index
• 21:00 President Trump Speech

Upcoming Key Events

Wednesday (March 1)

• 10:00 US ISM Manufacturing PMI. Estimate 56.2

*All release times are GMT

*Key events are in bold

WTI/USD for Tuesday, February 28, 2017

WTI/USD February 28 at 12:05 EST

Open: 54.14 High: 54.22 Low: 53.19 Close: 53.35

WTI USD Technical

WTI/USD was flat in the Asian session. The pair has posted losses in the European and North American sessions

• 52.22 remains a weak support level and could be tested in the North American session
• 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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