WTI/USD – US Crude Continues Rally on OPEC Agreement

Oil prices have climbed sharply on Thursday, continuing the strong gains which marked the Wednesday session. In North American trade, WTI/USD futures are trading at $51.48. Brent crude futures punched past the $50 level on Wednesday and have climbed to $54.15, its highest level since August 2015. The Brent premium stands at $2.67. On the release front, unemployment claims disappointed. The indicator climbed to 268 thousand, its highest level since July. The markets had expected a reading of 252 thousand. On a brighter note, ISM Manufacturing PMI improved to 53.2 points, beating the estimate of 52.1 points. US Employment indicators will be in the spotlight on Friday, highlighted by US Nonfarm Payrolls, one of the most important indicators.

It’s been a stellar week for crude, which has skyrocketed 16.6 percent against the US dollar. Oil prices have surged as OPEC made good on its promise to reach an agreement to cut production levels. The deal caught the markets by surprise, as most analysts had expected the usual ending of an inconclusive meeting. 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 the first cap agreement by OPEC since 2008. The deal should reduce the worldwide glut of oil and stabilize oil prices, on the assumption that OPEC members honor 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.

The US economy continues to roll, as underscored by an excellent GDP report for the third quarter. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. There was also good news on the consumer front. Solid consumer confidence numbers have been a critical factor in the US recovery, as stronger consumer confidence is linked to increased consumer spending. 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

Saudi’s Accept Big Hit in OPEC Output Deal

WTI/USD Fundamentals

Thursday (December 1)

  • 7:30 US Challenger Job Cuts. Actual -13%
  • 8:30 US Unemployment Claims. Estimate 252K. Actual 268K
  • 9:45 US Final Manufacturing PMI. Estimate 53.9. Actual 54.1
  • 10:00 US ISM Manufacturing PMI. Estimate 52.1. Actual 53.2
  • 10:00 US Construction Spending. Estimate 0.6%. Actual 0.5%
  • 10:00 US ISM Manufacturing Prices. Estimate 52.0. Actual 54.5
  • 10:30 US Natural Gas Storage. Estimate -52B. Actual -50B
  • All Day – US Total Vehicle Sales

Upcoming Key Events

Friday (December 2)

  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 165K
  • 8:30 US Unemployment Rate. Estimate 4.9%

*All release times are EST

*Key events are in bold

WTI/USD for Thursday, December 1, 2016

WTI/USD December 1 at 11:55 EST

Open: 49.29 High: 51.62 Low: 49.08 Close: 51.48

WTI USD Technical

S3 S2 S1 R1 R2 R3
33.22 40.57 46.54 52.22 58.32 65.05
  • WTI/USD was flat in the Asian session. The pair posted small gains in the European session and has added sharp gains in North American trade
  • 46.54 is providing support
  • 52.22 is a weak resistance line

Further levels in both directions:

  • Below: 46.54, 40.57, 33.22 and 26.06
  • Above: 52.22, 58.32 and 65.05

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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.