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WTI/USD – US Crude Soars as IEA Predicts Tighter Oil Market

US crude has posted sharp gains on Thursday, rebounding from losses seen on Wednesday. In the North American session, WTI/USD futures are trading at $43.19. Brent crude has improved to $45.61, as the Brent premium has widened to $2.42. Crude responded positively to an IEA (International Energy Agency) report that said crude stockpiles will shrink in the third quarter. There was more good news from the US labor market, as Unemployment Claims dropped to 266 thousand, beating expectations. Friday will be busy, as the US releases key retail sales, CPI and consumer confidence reports.

US crude prices continue to show volatility this week. Crude has jumped 4.2% on Thursday, after the well-respected IEA stated that oil supplies will decrease in the third quarter, despite record pumping levels from OPEC in July. [1] The IEA added that although oil prices have dropped recently, its balances do not show an oversupply in the second of 2016, and that it expects demand to increase in the third quarter. According to Phil Flynn, senior energy analyst at Price Futures Group, $40 level is a key support line and prices are expected to trade within a range for several weeks. Crude dropped 2.2% on Wednesday, after Crude Oil Inventories, often a market-mover of US crude, showed a surplus of 1.1 million last week, surprising the markets, which had anticipated a decline of 1.3 million. Crude Inventories has posted surpluses for three consecutive weeks, each time confounding the markets, which had predicted that crude stockpiles would decline.

US employment numbers continue to look sharp. On Thursday, it was the turn of Unemployment Claims, which dropped to 266 thousand, beating the forecast of 272 thousand. Earlier this week, the Labor Market Conditions Index and JOLTS Job Openings both beat expectations. Last week, Nonfarm Payrolls sparkled, surprising the markets and buoying the US dollar. The July indicator surprised the markets with a huge gain of 255 thousand, crushing the estimate of 180 thousand. This release follows the outstanding June reading of 280 thousand. There was more positive news as Average Hourly Earnings gained 0.3%, edging above the forecast of 0.2%. Prior to the payrolls release, a September hike was virtually off the table, especially in light of the soft US GDP report in late July. However, the stellar job numbers will force to Fed to give serious thought to a move in September. Employment and inflation releases in the next few weeks will be critical factors in determining if the Fed makes a move next month, or waits until December before revisiting the rate question.

WTI/USD Fundamentals

Thursday (August 11)

*Key events are in bold

*All release times are EDT

WTI/USD for Thursday, August 11, 2016

WTI/USD August 11 at 12:00 EDT

Open: 41.48 High: 43.38 Low: 41.11 Close: 43.33

WTI USD Technical

S3 S2 S1 R1 R2 R3
30.55 35.25 39.32 43.45 46.69 50.13

Further levels in both directions:

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 [5]

Market Analyst at OANDA [6]
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.
Kenny Fisher

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