US crude futures have posted losses on Tuesday, trading at $36.92 a barrel in the North American session. Brent crude futures are trading just above the $40 level, at $40.10. In economic news, the sole event on the schedule is the NFIB Small Business Index. The indicator slipped to 92.9 points, well below the estimate of 94.5 points.
US crude prices have stabilized in recent weeks. This has been good news for global markets, which have been in turmoil over the crash in oil prices coupled with weaker growth in China. Higher oil prices could lead to higher inflation, something sorely lacking in the US and other developed economies. Indeed, weak US inflation is one factor that weighs against the Fed raising interest rates later in March. However, the recent rally by the commodity could be short-lived. Earlier this week, Morgan Stanley released a research note stating that much of the recent improvement in oil prices was due to the deprecation of the US dollar, and warned that the huge oversupply of oil could again push prices lower.
US employment numbers painted a mixed picture last week. Nonfarm Payrolls impressed with a reading of 242 thousand in January, much higher than the estimate of 195 thousand. This was much stronger than the previous (revised) reading of 171 thousand. The US economy has added an average of 225,000 jobs per month since December, an impressive number considering that the economy has softened in the early part of 2016. However, the positive news was tempered by a soft wage growth report, which declined by 0.1%, shy of the estimate of a 0.2% gain. This marked the first drop in wages since December 2014. This indicator is closely linked to inflation, since an increase in wages means workers have more money to spend. The indicator’s decline means that that Federal Reserve’s inflation target of about 2.0% remains far off, so the Fed, which is keeping a close eye on the weak inflation picture, is unlikely to raise rates before mid-2016.
Tuesday (March 8)
- 6:00 US NFIB Small Business Index. Estimate 94.5. Actual 92.9
*Key events are in bold
*All release times are EST
WTI/USD for Tuesday, March 8, 2016
WTI/USD March 8 at 11:30 EST
Open: 37.90 Low: 36.59 High: 38.40 Close: 36.92
- WTI/USD lost ground in the Asian session and recovered in European trade. The pair has posted losses in North American session.
- There is resistance at 37.75
- 35.09 is providing support
Further levels in both directions:
- Below: 35.09. 32.22 and 30.00
- Above: 37.75, 40.00 and 43.45
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