West Texas Crude Unchanged as Crude Inventories Dip

West Texas crude is showing little movement in the Wednesday session, as WTI/USD stays close to the $48 level. In North American trade, WTI crude futures are trading at $48.60. Brent Crude is trading at $51.65, as the Brent premium stands at $3.05. On the release front, there were no surprises from key US consumer reports, as retail sales and CPI posted small gains in February. Today’s highlight is the Federal Reserve policy meeting, with the central bank widely expected to raise the benchmark rate a quarter-point, from 0.50% to 0.75%. On Thursday, the US will release a host of key indicators, led by unemployment claims.

Oil prices remain under strong pressure. West Texas crude plunged 8.7 percent last week and dipped below the $47 level on Tuesday. This was in response to reports that Saudi Arabia has increased oil production above 10 million barrels a day, raising concerns about a global oil glut. Meanwhile, US Crude Oil Inventories finally reversed directions, posting a drawdown of 0.2 million barrels, compared to an estimate of 3.3 million. This decline comes after the indicator posted 11 surpluses in the past 12 weeks, reflective of increasing US shale production. The string of surpluses has dampened OPEC’s hopes of raising prices, as the cartel cut production levels at the beginning of January. Compliance with the agreement stands at an impressive 94% and OPEC had high hopes of pushing crude to $60 or more, but oil prices continue to lose ground in 2017.

US Shale Harming Output Deals

All eyes are on the Federal Reserve, which will issue a rate announcement later on Wednesday. With the markets expecting a quarter-point rate hike on Wednesday, will the currency markets react to a Fed move? Although a rate hike has been priced in by the markets at 93%, there have been disappointments in the past, so a rate move could boost the dollar at the expense of gold. Strong US employment numbers in February have reinforced market speculation that the Fed will raise rates for the first time this year. Nonfarm payrolls sparkled in February, as the indicator jumped to 235 thousand, easily beating the estimate of 196 thousand. Wage growth climbed 2.6% compared to February 2016, while the participation rate edged up to 63.0%, up from 62.9%. These solid job numbers have also provided President Trump with a much-needed boost. Trump is under pressure to present an economic agenda, but the markets won’t mind giving him some additional breathing room, with the economy performing so well.

WTI/USD Fundamentals

Wednesday (March 15)

  • 8:30 US CPI. Estimate 0.0%. Actual 0.1%
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
  • 8:30 US Core Retail Sales. Estimate 0.1%. Actual 0.2%
  • 8:30 US Retail Sales. Estimate 0.2%. Actual 0.1%
  • 8:30 US Empire State Manufacturing Index. Estimate 15.3. Actual 16.4
  • 10:00 US Business Inventories. Estimate 0.3%. Actual 0.3%
  • 10:00 US NAHB Housing Market Index. Estimate 65. Actual 71
  • 10:30 US Crude Oil Inventories. Estimate 3.3M. Actual -0.2M
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.00%
  • 14:00 US FOMC Press Conference
  • 16:00 US TIC Long-Term Purchases. Estimate 13.4B

Upcoming Key Events

Thursday (March 16)

  • 8:30 US Building Permits. Estimate 1.26M
  • 8:30 US Philly Fed Manufacturing Index. Estimate 30.2
  • 8:30 US Unemployment Claims. Estimate 245K

*All release times are GMT

*Key events are in bold

WTI/USD for Wednesday, March 15, 2017

WTI/USD March 15 at 11:25 EST

Open: 48.37 High: 48.89 Low: 48.17 Close: 48.48

WTI USD Technical

S3 S2 S1 R1 R2 R3
33.22 40.57 46.54 52.22 58.32 65.05

WTI/USD has showed little change during the Wednesday session

  • 46.54 continues to provide weak support
  • 52.22 is the next resistance line
  • Current range: 46.54 to 52.22

Further levels in both directions:

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

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.