US crude has started the week with sharp losses. In Monday’s North American session, US crude futures are trading at $52.40. Brent crude futures are trading at $55.35, as the Brent premium stands at $2.95. On the release front, there are no major US releases on the schedule. On Tuesday, the US releases JOLTS Job Openings, with the indicator expected to improve to 5.59 million.
Crude prices dropped on Monday on indications that more US shale producers are drilling for oil. According to Baker Hughes, an oilfield services group, the number of oil rigs operating in the US has increased for a tenth straight week. This increase in production has offset lower production from OPEC and other producers, under an agreement which commenced on January 1. Oil prices could remain volatile as the markets monitor production levels and try to determine if the huge global oversupply of crude is in fact getting smaller due to the OPEC agreement.
The Federal Reserve was in the spotlight last week, with the release of the minutes of its December meeting. The minutes were cautious in tone, with Fed policymakers essentially saying that monetary policy in the coming months will be dictated in large part by the economic platform of the incoming Trump administration, which remains unclear. FOMC members expressed concern about higher inflation levels, given the “prospects for more expansionary fiscal policies in the coming years”. This is a clear reference to president-elect Trump’s plans to increase fiscal spending and cut taxes, which would likely result in higher inflation, something the US hasn’t had to deal with in years. Still, policymakers haven’t changed their view that gradual rate hikes remains an appropriate monetary policy. Many analysts are predicting another rate hike in June, but this forecast could easily change, depending on the performance of the US economy in the first half of 2017.
Monday (January 9)
- 10:00 US Labor Market Conditions Index. Actual -0.3
- 15:00 US Consumer Credit. Estimate 18.3B
Tuesday (January 10)
- 10:00 US JOLTS Job Openings. Estimate 5.59M
*All release times are EST
* Key events are in bold
WTI/USD for Monday, January 9, 2017
WTI/USD January 9 at 11:35 EST
Open: 53.23 High: 54.11 Low: 53.05 Close: 52.95
WTI USD Technical
- WTI/USD was flat in the Asian session. The pair has posted considerable losses in the European and North American sessions
- 52.22 is a weak support level
- 58.32 is the next resistance line
Further levels in both directions:
- Below: 52.22, 46.54, 40.57 and 33.22
- Above: 58.32, 65.05 and 72.99
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