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WTI/USD – US Crude Surges as OPEC Reaches Output Agreement

Oil prices have risen sharply on Wednesday, as OPEC members reached a deal on production cuts at a meeting in Vienna. In North American trade, WTI/USD futures are trading at $48.70. Brent crude futures have punched past the $50 level, trading at $51.64. The Brent premium has widened to $2.94. On the release front, ADP Nonfarm Employment Change jumped to 216 thousand, well above the forecast of 161 thousand. On Thursday, the US releases unemployment claims and the ISM Manufacturing PMI.

There was the usual drama and fluctuations in oil prices ahead of another OPEC meeting, but this time there was a surprise ending. OPEC announced that it had reached a production cut agreement. One of the major sticking points had been Iran’s insistence to maintain output at pre-sanction levels. Saudi Arabia swallowed hard and accepted Iran’s demand, paving the path for a production agreement by OPEC since 2008. US crude has surged 6.6 percent in the Wednesday session and is trading above the $48 level. The agreement should reduce the worldwide glut of oil and stabilize oil prices, on the assumption that OPEC members do not cheat on their production quotas. US crude also received a boost from Crude Oil Inventories, which surprised with a decline of 0.9 million barrels. The market had expected a surplus of 0.7 million.

Strong consumer confidence has been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

US Q3 GDP Revised Upward on Consumer Spending [1]

Saudi’s Accept Big Hit in OPEC Output Deal [2]

WTI/USD Fundamentals

Wednesday (November 30)

Upcoming Key Events

Thursday (December 1)

*All release times are EST

*Key events are in bold

WTI/USD for Wednesday, November 30, 2016

WTI/USD November 30 at 11:20 EST

Open: 45.38 High: 49.11 Low: 45.38 Close: 48.70

WTI USD Technical

S3 S2 S1 R1 R2 R3
33.22 40.57 46.54 52.22 58.32 65.05

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 [6]

Market Analyst at OANDA [7]
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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