US crude has posted losses on Tuesday, continuing the downward trend which marked the Monday session. In the North American trade, US crude futures are trading at $51.94. Brent crude futures have dropped to $54.89, as the Brent premium stands at $2.95. On the release front, the trade deficit narrowed to $44.3 billion, beating the forecast of $45.0 billion. On the employment front, JOLTS Jobs Openings edged lower to 5.52 million, shy of the estimate of 5.56 million. On Wednesday, we’ll get a look at the weekly Crude Oil Inventories report.
US crude stockpiles continue to post surpluses, which has weighed on oil prices. Last week, Crude Oil Inventories soared, with a surplus of 6.5 million barrels. This was much higher than the estimate of 2.6 million. This marked a fourth straight surplus, each of which handily beat the market forecasts. US oil drilling has been on the increase, and more US production could offset the recent Russia/OPEC agreement which is aimed at reducing global oil supplies by some 2 percent. Analysts say that compliance by producers which signed the agreement has been high. This in itself is a noticeable achievement, given rampant cheating in previous OPEC agreements. Despite the agreement, which went into effect on January 1, oil prices are lower five weeks later. A broadly stronger US dollar has weighed on oil prices, but oil continues to waver – one analyst described the recent movement of crude as “a tug of war” between bears and bulls.
President Donald Trump continues to create controversies on a daily basis, and his brash and undiplomatic style has not endeared him to the markets. Moreover, the lack of an economic policy from the new administration is a major source of concern and the the post-election euphoria which sent the markets higher has dissipated. The Federal Reserve, which had trumpeted that it was planning a series of hikes in 2017 (sound familiar?), was more cautious in its recent rate statement and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar. On the other hand, if Trump makes good on his promises to “make America first” and implement protectionist policies, the greenback could lose ground, which would be bullish for crude prices.
Tuesday (February 7)
- 8:30 US Trade Balance. Estimate -45.0B. Actual -44.3B
- 10:00 US JOLTS Job Openings. Estimate 5.56M. Actual 5.50M
- 10:00 US IBD/TIPP Economic Optimism. Estimate 56.2. Actual 56.4
- 15:00 US Consumer Credit. Estimate 20.3B
*All release times are GMT
*Key events are in bold
WTI/USD for Tuesday, February 7, 2017
WTI/USD February 7 at 11:55 EST
Open: 53.13 High: 53.22 Low: 52.04 Close: 51.94
WTI USD Technical
WTI/USD was flat in the Asian session. The pair has posted losses in the European and North American sessions
- 46.54 is a weak support level
- 52.22 has switched to a resistance role
- Current range: 46.54 to 52.22
Further levels in both directions:
- Below: 46.54, 40.57 and 33.22
- Above: 52.22, 58.32, 65.05 and 72.99
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