US crude has posted small losses in the Tuesday session. In North American trade, WTI/USD futures are trading at $50.13 per barrel. Brent futures are trading at $50.82, as the Brent premium has narrowed to $0.69. On the release front, CB Consumer Confidence Spending dropped to 98.6 points, well short of the forecast of 101.5 points. On Wednesday, the US will release Crude Oil Inventories and New Home Sales.
US crude inventories surprised last week with a large drawdown of 5.2 million barrels. The markets had predicted a surplus of 2.2 million. This pushed crude prices higher after the release, but profit taking on Thursday pushed oil prices back down. Crude inventories will be released on Wednesday, with the estimate standing at +0.7 million.
On Friday, Russian Energy Minister Alexander Novak said that an oil output agreement was needed in order to stabilize oil prices. OPEC members surprised analysts by reaching a tentative agreement to cap output back in September and are holding another meeting on November 30. Previous attempts by OPEC to set limits on each member have failed, so it’s questionable if the cartel will have more success this time around. Still, the fact that oil exporters are making concentrated efforts to reach an agreement is likely to continue to cause volatility in oil prices.
US jobless claims have sparkled in recent weeks, so there was some surprise as the key indicator climbed to 260 thousand last week, higher than the forecast of 251 thousand. This marked the first reading since August that the key indicator has not beat estimates. Still, the dollar didn’t lose any ground, as the 4-week daily average of jobless claims remains excellent. There was good news from the manufacturing front, as the Philly Fed Manufacturing Index posted a strong gain of 9.7 points, easily beating the forecast of 5.2 points. On the inflation front, US consumer inflation numbers were a mixed bag. CPI edged up to 0.3%, up from 0.2% a month earlier. This was the strongest gain since April. Core CPI went the opposite direction, slipping to 0.1%, down from 0.3% a month earlier. These numbers could have an important bearing on the Fed’s interest rate decision in December. Currently, a December rate hike is currently priced in at 68 percent, as market sentiment remains high that the Fed will press the rate trigger before the end of the year.
Tuesday (October 25)
- 9:00 US HPI. Estimate 0.5%. Actual 0.7%
- 9:59 US Richmond Manufacturing Index. Estimate -5 Actual -4
- 10:00 US S&P/CS Composite-20 HPI. Estimate 5.1%. Actual 5.1%
- 10:00 US CB Consumer Confidence. Estimate 101.5. Actual 98.6
- 10:00 IBF/TIPP Economic Optimism. Estimate 47.6. Actual 51.3
Upcoming Key Events
Wednesday (October 26)
- 10:00 US New Home Sales. Estimate 601K
- 10:30 US Crude Oil Inventories. Estimate +0.7 million
*All release times are EDT
*Key events are in bold
WTI/USD for Tuesday, October 25, 2016
WTI/USD October 25 at 11:45 EDT
Open: 50.52 High: 50.93 Low: 49.79 Close: 49.85
WTI USD Technical
WTI/USD was flat in the Asian session. In European trade, the pair posted slight gains but then retracted. WTI/USD continues to lose ground in the North American session
- 46.69 is providing support
- 50.13 is a weak resistance line
Further levels in both directions:
- Below: 46.69, 43.45 and 38.38
- Above: 50.13, 53.50, 59.69 and 65.49
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