Crude Oil Subdued, Key Inflation Report Next

US Crude is steady on Tuesday, as February futures are trading at $29 a barrel in the North American session. In economic news, it’s a quiet day in the US, with two minor releases. We’ll get a look at key US numbers on Wednesday, with the release of CPI and Building Permits.

Crude oil prices continue to fall, and dipped below the symbolic $30 level late last week. Crude has fallen 8 dollars in the month of January, a whopping 22% decline, and is languishing at levels not seen since February 2004. The well-respected International Energy Agency stated on Tuesday that oil prices could continue to slide. In a development which could exacerbate the global oil slump, Iran has been given the green light to resume oil exports. Western nations, led by the US, officially lifted all sanctions on Iran over the weekend, after the International Atomic Energy Agency announced that Iran had fully complied with its obligations under the nuclear agreement with the Western powers. Iran is expected to immediately begin exporting up to 600,000 barrels/day, adding to the huge glut of oil on global markets which has led to oil prices tumbling. Meanwhile, OPEC said that it had pumped less oil in December, but this is unlikely to boost oil prices, as Iran becomes the latest supplier in an overly crowded market.

With the Fed finally pressing the rate trigger in December, the markets are looking for hints of the timing of the next interest rate increase. A rate hike at next week’s policy meeting is not considered likely, coming so soon after the December move. A hike by the Fed in March is more probable, although this is contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. Another concern is a lack of wage growth, despite a robust labor market. The Fed will be keeping a close eye on Wednesday’s CPI reports, and it’s a safe bet that policymakers will want to see stronger inflation numbers before signing on for another rate hike.

WTI/USD Fundamentals

Tuesday (Jan. 19)

• 10:00 US NAHB Housing Market Index. Estimate 61 points. Actual 60 points
• 16:00 US TIC Long-Term Purchase

Wednesday (Jan. 20)

• 8:30 US Building Permits. Estimate 1.20M
• 8:30 US CPI. Estimate 0.0%
• 8:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are EST

WTI/USD for Tuesday, January 19, 2016

WTI/USD January 19 at 11:05 GMT

Open: 29.10 Low: 28.67 High: 30.18 Close: 29.32

WTI/USD Technical

• WTI/USD posted gains in the Asian session but retracted in European session. The pair has been choppy in North American trade.
• The round number of 30.00 is the next resistance line
• 26.64 is providing support

Further levels in both directions:

• Below: 26.64, 22.88 and 20.00
• Above: 30.00, 32.22 and 35.09

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