Crude Oil Ends Dismal Year on Whimper

WTI Crude is showing marginal movement on Thursday, as crude futures trade at $36.70 per barrel in Thursday’s North American session. In economic news, US Unemployment Claims rose to 287 thousand, higher than expected. There was more bad news as Chicago PMI plunged to 42.8 points in December, well off expectations, and much weaker the November reading of 48.7 points.

US Crude remains mired at low levels, as crude futures have plunged 30 percent  in 2015. WTI/USD has lost over 3% of its value on Wednesday, responding sharply to an unexpected surplus in crude inventories. The weekly indicator surged 2.6 million, surprising the markets which had expected a loss of 1.8 million. US and global oil supplies continue to far exceed demand, and oil-producing nations are pumping out oil at high levels, hoping to hold onto market share even as oil prices continue to slide. Earlier in December, crude dropped below $35, its lowest level since February 2009. The sharp descent could continue into 2016, with some analysts predicting that the commodity will drop below the $30 level. That scenario hasn’t happened since February 2004.

The US economy has shown strong improvement, but signs of weakness remain, such as the housing sector. On Wednesday, Pending Home Sales was unexpectedly soft, posting a decline of 0.9%, compared to an estimate of a 0.6% gain. Recent housing indicators have also fallen below expectations. Meanwhile, CB Consumer Confidence sparkled in the December report, as the key indicator jumped to 96.5 points, up sharply from 90.4 points a month earlier. This easily beat the estimate of 93.9 points. This excellent reading followed a solid UoM Consumer Sentiment, which improved to 92.6 points, above the forecast of 92.1 points and marking a 4-month high. Consumer confidence indicators are closely monitored by analysts, as stronger consumer confidence often translates into increased consumer spending, a key driver of economic growth. Strong consumer demand has been an important factor in the strength of the US economy, which led to the historic rate hike by the Federal Reserve earlier in December.

WTI/USD Fundamentals

Thursday (Dec. 31)

  • 13:30 US Unemployment Claims. Estimate 274K. Actual 287K
  • 14:45 US Chicago PMI. Estimate 50.4 points. Actual 42.9 points
  • 15:30 US Natural Gas Storage. Estimate -54B. Actual -58B

*Key releases are highlighted in bold

*All release times are GMT

WTI/USD for Thursday, December 31, 2015

WTI/USD December 31 at 14:15 GMT

WTI/USD  36.70 H: 36.85 L: 36.23

WTI/USD Technical

S3 S2 S1 R1 R2 R3
30.00 32.22 35.09 37.75 39.87 42.59
  • There is resistance at 37.75
  • 35.09 continues to provide support

Further levels in both directions:

  • Below: 35.09, 32.22 and 30.00
  • Above: 37.75, 39.87, 42.59 and 47.05

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.