WTI/USD – US Crude Ticks Higher as Markets Looks for Cues

US crude has ticked higher on Monday. In the North American session, WTI/USD futures are trading at $43.86 per barrel. Brent futures are trading at $46.67, as the Brent premium stands at $2.81. In economic news, it’s a slow start to the week, with just one release on the schedule. NAHB Housing Market Index improved to 65 points, beating expectations. On Tuesday, the US will release Building Permits, a key event.

Crude prices suffered a rough week, sliding 5.2 percent. Crude posted losses following a report from the International Energy Agency (IEA) which said that the global oversupply of oil could extend into the middle of 2017. The glut of oil has weighed heavily on oil prices and given a sense of urgency to oil producers to try and cap production in order to stabilize prices. Major oil producers will meet next week in Algiers, but previous summits have ended without any agreement on a production freeze, and there is a great deal of skepticism that things will be any different this time around.

US releases ended the week on a positive note, as August consumer inflation was a bit better than expected. CPI posted a gain of 0.2%, edging above the forecast of 0.1%. It was a similar story with Core CPI, which rose 0.3%, compared to the forecast of 0.2%. CPI was up from 0.0% in July, with the rise being attributed to higher shelter and health care costs. If inflation indicators continue to rise, there is a greater chance of a rate hike in December, and increased speculation about a Fed hike could push the greenback to higher levels. The Federal Reserve will hold a policy meeting on September 21, and a rate hike is considered extremely unlikely, with a hike priced in at just 12 percent.

Ever since an upbeat speech from Janet Yellen in August, the markets have been speculating about the timing of the next Fed rate hike. However, recent economic numbers have been mixed, so the Fed is expected to remain on the sidelines on Wednesday, when it sets the benchmark rate. However, the Fed statement will be of intense interest, and the markets will be looking for clues regarding a December move. If Janet Yellen delivers a dovish message, the market’s mood could sour and the dollar could lose ground. Recent comments from FOMC members, which have been almost contradictory at times, have left the markets confused and reinforced the perception that the Fed remains divided regarding its near-future monetary policy. Will the rate picture clear up or remain fuzzy after the rate statement?

WTI/USD Fundamentals

Monday (September 19)

• 14:00 US NAHB Housing Market Index. Estimate 60 points. Actual 65 points

Tuesday (September 20)

• 12:30 US Building Permits. Estimate 1.17M

*Key events are in bold

*All release times are EDT

WTI/USD for Monday, September 19, 2016

WTI/USD September 19 at 12:15 EDT

Open: 43.72 High: 44.15 Low: 43.26 Close: 43.86

WTI USD Technical

• WTI/USD was flat in the Asian and European sessions. The pair has posted small gains in North American trade
• 43.45 was tested earlier in support. It could break in the North American session
• There is resistance at 46.49

Further levels in both directions:

• Below: 43.45, 38.38 and 32.33
• Above: 46.69, 50.13, 53.50 and 59.69

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