WTI/USD – Crude Unchanged, Shrugs off Surprise Inventory Surplus

US crude is trading just below the $40 level on Wednesday. In the North American session, WTI/USD futures are trading at $39.97. Brent crude is trading at $42.54, as the Brent premium has widened t0 $2.57. On the release front, Crude Oil Inventories gained 1.4 million, surprising the markets which had expected a decline. ADP Nonfarm Payrolls improved to 179 thousand, beating the estimate. The ISM Non-Manufacturing PMI came in at 55.5 points, short of expectations. On Thursday, the US releases Unemployment Claims.

Crude Oil Inventories surprised the markets with a surplus of 1.4 million last week. The estimate stood at -1.6 million. The gain underscores the oversupply of crude on world markets, which has weighed on oil prices. US crude has broken below the symbolic $40 level, and with producer countries showing little appetite to curb output, the downturn in prices could continue.

Other US  releases were a mixed bag on Wednesday. July employment numbers started off on the right foot, as ADP Nonfarm Payrolls improved to 179 thousand, beating the estimate of 171 thousand. However, the ISM Non-Manufacturing PMI disappointed, as the index dipped to 55.5 points, missing the estimate of 56.0 points. On Thursday, we’ll get a look at Unemployment Claims, followed by the all-important Nonfarm Payrolls on Thursday. Strong readings could renew speculation of a rate hike in September. Market sentiment has soured on the US dollar since last week’s GDP report, as the gain of 1.2% was well short of the forecast of a 2.6% gain.  The markets have circled September and December as the most likely dates for a rate hike, but if the Fed isn’t satisfied with the economy’s performance, it could delay any moves until 2017.

WTI/USD Fundamentals

Wednesday (August 3)

  • 8:15 ADP Non-Farm Employment Change. Estimate 171K. Actual 179K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.0. Actual 55.5
  • 9:45 US Final Services PMI. Estimate 51.0. Actual 51.4
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.0. Actual 55.5
  • 10:30 US Crude Oil Inventories. Estimate -1.6M. Actual +1.4M

Thursday (August 4)

  • 8:30 US Unemployment Claims. Estimate 265K

*Key events are in bold

*All release times are EDT

WTI/USD for Wednesday, August 3, 2016

WTI/USD August 3 at 11:15 EDT

Open: 39.73 High: 40.45 Low: 39.24 Close: 39.88

WTI USD Technical

S3 S2 S1 R1 R2 R3
30.55 35.25 39.32 43.45 46.69 50.13
  • WTI/USD was flat in the Asian session. The pair posted small gains in the European session and has shown some volatility in North American trade
  • 39.32 is providing weak support
  • There is resistance at 43.45

Further levels in both directions:

  • Below: 39.32, 35.25 and 30.55
  • Above: 43.45, 46.69, 50.13 and 53.50

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 Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.