US crude has posted considerable gains on the Thursday session, trading close to the symbolic $50 level. In North American trade, WTI/USD futures are trading at $49.79 per barrel. Brent futures are trading at $50.54, as the Brent premium stands at $0.76. On the release front, Thursday’s indicators were positive. Core Durable Goods Orders improved in September with a gain of 0.2%, matching the forecast. Unemployment Claims edged down to 258 thousand, below the estimate of 261 thousand. As well, Pending Home Sales rebounded with a strong gain of 1.5%, above the estimate of 1.2%.
US crude inventories surprised yet again with a drawdown on Wednesday. The indicator dropped 0.7 million barrels, compared to an estimate of a 0.6 million surplus. Predictably crude prices rose after the release, which points to continuing strong demand for oil. Crude inventory releases continue to confound the markets. The indicator has posted declines in seven of the past eight weeks, but the markets were off the mark, predicting surpluses for each of those releases. On the international oil scene, the markets are closely following attempts by OPEC to reach a production agreement in order to stabilize 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.
Market sentiment remains high that the Federal Reserve will press the rate trigger in December, with CME Fed Watch pricing in a hike at 72 percent. The prospect of a US rate hike for the first time in a year has bolstered the US dollar against its rivals. The US economy remains strong, buoyed by a labor market that is close to capacity, with unemployment hovering at just 5.0%. Inflation levels remain low and are unlikely to show much improvement in the next few months. Although the Fed would prefer stronger inflation, other economic indicators remain strong enough such that the lack of inflation is unlikely to be the critical factor in the Fed rate decision. The Fed will also hold a policy meeting in early November, but is unlikely to make any rate moves just before the US presidential election.
Thursday (October 27)
- 8:30 US Core Durable Goods Orders. Estimate 0.2%. Actual 0.2%
- 8:30 US Unemployment Claims. Estimate 261K. Actual 258K
- 8:30 US Durable Goods Orders. Estimate 0.1%. Actual -0.1%.
- 10:00 US Pending Home Sales. Estimate 1.2%. Actual 1.5%
- 10:30 US Natural Gas Storage. Estimate 71B. Actual 73B
Upcoming New Events
Friday (October 28)
- 8:30 US Advance GDP. Estimate 2.5%
- 10:00 US Revised UoM Consumer Sentiment. Estimate 88.2
*All release times are EDT
*Key events are in bold
WTI/USD for Thursday, October 27, 2016
WTI/USD October 27 at 11:20 EDT
Open: 49.26 High: 49.90 Low: 49.00 Close: 49.79
WTI USD Technical
WTI/USD was flat in the Asian and European sessions. The pair has posted considerable gains 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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