WTI/USD – Crude Rebounds on Signs of OPEC Compliance With Cuts

After a two-day slide, US crude has rebounded in the Wednesday session. In North American trade, US crude futures are trading at $52.23. Brent crude futures are trading at $55.37, as the Brent premium stands at $3.14. On the release front, Crude Oil Inventories posted a gain of 4.1 million barrels, well above the estimate of 0.9 million. On Thursday, the US releases Unemployment Claims.

Crude prices remain volatile this week. The commodity dropped sharply in the Monday and Tuesday sessions, dropping some 5.5 percent over that period. Much of the decline was attributed to an increase in the number of oil rigs operating in the US and Canada. Higher oil prices have made it more profitable for North American rigs to commence production, which could offset lower production levels from OPEC and other producers. At the same time, heavyweights Russia and Saudi Arabia appear to have lowered production as of January 1, as required by the recent oil exporters agreement. This has led to a rise in crude prices on Wednesday. This trend of sharp fluctuations in crude prices could continue as the markets monitor production levels and try to determine if the huge global oversupply of crude is in fact getting smaller with the recent oil exporters agreement taking effect.

The US released key employment numbers on Friday, and the markets responded with a thumbs-up, which boosted the US dollar. Wages rebounded in December, as Average Hourly Earnings climbed 0.4%, edging above the estimate of 0.3%. This marked a strong turnaround after the November reading of -0.1%. The news was not as bright from Nonfarm Payrolls, which dropped to 156 thousand, well off the estimate of 175 thousand. This marked a 3-month low, but the dollar still posted gains. The unemployment rate edged up to 4.7%, matching the forecast.

Russia and Kazakhstan Announce Higher than Expected Cuts as per Agreement

WTI/USD Fundamentals

Wednesday (January 11)

  • 10:30 US Crude Oil Inventories. Estimate 0.9M. Actual 4.1M
  • 11:00 President-Elect Donald Trump Speech
  • 13:01 US 10-year Bond Auction
  • 13:20 US FOMC Member William Dudley Speech

Thursday (January 12)

  • 8:30 US Unemployment Claims. Estimate 266K

*All release times are EST

* Key events are in bold

WTI/USD for Wednesday, January 11, 2017

WTI/USD January 11 at 12:45 EST

Open: 51.00 High: 52.34 Low: 50.75 Close: 52.23

WTI USD Technical

S3 S2 S1 R1 R2 R3
40.57 46.54 52.22 58.32 65.05 72.99
  • WTI/USD was flat in the Asian and Europeans sessions. The pair has posted considerable strong gains in the North American session
  • 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

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

Market Analyst at OANDA
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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