US crude has posted small gains on Thursday, continuing the upward trend we saw on Wednesday. In the North American session, crude is trading at $46.30 per barrel in the North American session. Brent crude is trading at $47.41, as the Brent premium stands at $1.11. On the release front, Unemployment Claims was up sharply to 294 thousand, well above the estimate of 277 thousand. We’ll also hear from three FOMC members during the day. Friday is a data-heavy day, with the US publishing retail sales, inflation and consumer confidence reports.
Oil prices continue to move higher, and US crude broke above the $47 earlier on Thursday. The last time crude was above the $47 level was early November 2015. US crude posted strong gains on Wednesday, as Crude Oil Inventories, a weekly report, surprised the markets with a sharp decline of 3.4 million on Wednesday. The markets had expected a small gain of 0.7 million, and this figure marked the first decline in stockpiles in five weeks. The markets have been focused on Canadian oil production, as a massive wildfire in northern Alberta has forced the evacuation of 90,000 people and disrupted sand oil production, which has led to higher crude prices. Oil firms have restarted production in the region of the wildfire, albeit on a limited basis.
It continues to be one step forward, one step backward for US job numbers. Unemployment Claims, which have been moving higher, surged last week, hitting 294 thousand. This was the highest weekly claims level since July 2015. On Tuesday, JOLT Job Openings looked sharp in April, jumping to 5.76 million. This figure was much stronger than the estimate of 5.56 million. However, last week’s host of employment numbers were a mix, which predictably has raised concerns about the strength of the US labor market. Last week, Nonfarm Payrolls looked awful, as the key indicator slid to just 160 thousand, well short of the forecast of 203 thousand. This marked the lowest reading in seven months. On a brighter note, wages showed growth, as Average Hourly Earnings posted a second straight gain of 0.3%.
The markets are busy looking for clues as to what the Federal Reserve has planned next. In its April policy statement, the Fed stayed on the sidelines, but the message to the markets with regard to the US economy was one of cautious optimism. The statement noted continuing improvement in the labor market but added that it was keeping a watchful eye on low inflation levels. The Fed statement appeared to leave the open to a June rate hike, but last week’s soft payrolls report has put a damper on speculation about an imminent hike. Last week, New York Fed president William Dudley said he remains confident that the Fed could raise rates as much as twice this year, but many analysts are skeptical if the Fed will raise rates before 2017. The minutes of the April Fed meeting will be released next week, and any clues about a June hike could send the dollar higher against its rivals. Upcoming data, especially employment and inflation indicators, will be major factors as the Fed must decide whether to press the rate trigger in June.
Thursday (May 12)
- 8:30 US Unemployment Claims. Estimate 277K. Actual 294K
- 8:30 US Import Prices. Estimate 0.6%. Actual 0.3%
- 10:30 US Natural Gas Storage. Estimate 60B
- 11:00 US FOMC Member Loretta Mester Speaks
- 11:45 US FOMC Member Eric Rosengren Speaks
- 13:01 US 30-year Bond Auction
- 13:30 US Member Esther George Speaks
Upcoming Key Events
Friday (May 13)
- 8:30 US Core Retail Sales. Estimate 0.3%
- 8:30 US PPI. Estimate 0.3%
- 8:30 US Retail Sales. Estimate -0.3%
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 89.9 points
*Key events are in bold
*All release times are EDT
WTI/USD for Thursday, May 12, 2016
WTI/USD May 12 at 11:10 EDT
Open: 45.97 Low: 45.80 High: 47.03 Close: 46.30
- WTI/USD posted gains in the Asian and European sessions. The pair has retracted in North American trade.
- 43.45 is providing support
- 46.69 is a weak resistance line and was tested earlier in the Thursday session
Further levels in both directions:
- Below: 43.45, 40.00, 37.75 and 35.09
- Above: 46.69, 50.13 and 51.59