WTI/USD – Crude Struggling at 14-Week Lows on Oversupply Concerns

West Texas crude has steadied in the Monday session, following sharp losses last week. In North American trade, WTI crude futures are trading at $48.38. Brent Crude is trading at $51.36, as the Brent premium stands at $2.98. It’s a quiet start to the week, with no releases on Monday. On Tuesday, the sole release is US PPI, with the markets expecting a weak gain of 0.1%.

Last week was one to forget for WTI crude, as the commodity plunged 8.7 percent. On Monday, WTI crude briefly dropped below the $48, for the first time since November 30. Will the downturn continue this week? Crude is under strong pressure as crude stockpile reports continue to point to surpluses. Last week, the Crude Inventories soared to 8.2 million barrels, well above the forecast of 1.1 million. US crude has posted surpluses in 11 of the past 12 weeks, reflective of increasing US shale production. Most of the surpluses have been much higher than the forecasts, as the markets continue to underestimate the level of crude stockpiles. The ongoing surplus has put a damper on OPEC’s hopes to raise prices, as the cartel cut production levels at the beginning of January. Compliance with the agreement stands at an impressive 94% and OPEC had high hopes of pushing crude to $60 or more, but oil prices have actually declined in 2017.

US Shale Harming Output Deals

It’s full steam ahead for the US economy, buoyed by a red-hot labor market. On Friday, Nonfarm Payrolls sparkled with a gain of 235 thousand. This easily beat the estimate of 196 thousand. The strong release makes it a virtual certainty that the Fed will raise rates by a quarter-point on Wednesday. Although a rate hike has been priced in by the markets, there have been disappointments in the past, so a rate move will likely give the dollar a boost against its major rivals, such as the euro. The solid job numbers also give President Trump a much-needed boost. Trump is under pressure to present an economic agenda, but the markets won’t mind giving him some additional breathing room with the economy performing well.

WTI/USD Fundamentals

Monday (March 13)

  • There are no events in the US or UK

Upcoming Key Events

Tuesday (March 14)

  • 8:30 US PPI. Estimate 0.1%

*All release times are GMT

*Key events are in bold

WTI/USD for Monday, March 13, 2017

WTI/USD March 13 at 12:20 EST

Open: 48.08 High: 48.68 Low: 47.97 Close: 48.39

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 has shown limited movement in the European and North American sessions

  • 46.54 is providing support
  • 52.22 is the next resistance line
  • 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

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

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.