West Texas Crude Hugging $50 at Start of Week

West Texas crude has started the trading week quietly, as WTI future trade just above the symbolic $50 in the North American session, at $50.20. Brent crude futures are trading at $53.15, as the Brent crude premium stands at $2.95. On the release front, there is just one major release on the schedule. ISM Manufacturing PMI dropped to 57.2, matching the forecast.

It was a month to forget for crude, as prices sagged 6.0 percent in March. Weak oil prices is not the scenario that OPEC scripted, as its landmark deal to cut production was supposed to send crude above $60 a barrel and beyond. Instead, prices have fallen since the deal took effect on January 1. OPEC members have kept to the deal, as compliance levels have been exemplary. Still, the world remains awash in oil, as increasing US production has offset the OPEC cuts. US Crude Inventories continue to show surpluses, most of which have been higher than the forecast. Last week, US crude inventories have reached an all-time high of 534.0 million barrels, so oil prices may have trouble staying above the $50 level.

Donald Trump’s young presidency has been rocky, with Trump’s controversial statements and actions making headlines almost daily. The battles with the media continue, an economic policy remains a mystery, and Trump suffered a major setback as he couldn’t even muster a vote over his healthcare bill. Despite these hiccups, the US economy hasn’t missed a beat in 2017. The CB consumer confidence report soared to 125.6 in March, and strong consumer confidence levels should translate into increased consumer spending. GDP for the fourth quarter was revised to 2.1%, up from 1.9% in the previous GDP report. This points to strong growth for the economy,

The discussions around the monetary policy tables are not whether the Fed will raise rates, but rather how many times will the Fed press the rate trigger in 2017. The Fed has forecast two more hikes this year, but the markets are looking for three hikes, and the US dollar took a hit last week as the markets were disappointed with the Fed’s dovish rate statement. The Fed will release the minutes of its March meeting on Wednesday, and the markets will be looking for clues as to the timing of a possible rate hike.

WTI/USD Fundamentals

Monday (April 3)

• 9:45 US Final Manufacturing PMI. Estimate 53.5. Actual 53.3
• 10:00 US ISM Manufacturing PMI. Estimate 57.2. Actual 57.2
• 10:00 US Construction Spending. Estimate 1.0%. Actual 0.8%
• 10:00 US ISM Manufacturing Prices. Estimate 68.5. Actual 70.5
• 10:30 US FOMC Member Esther Dudley Speech
• All Day – US Total Vehicles Sales. Estimate 17.4M

*All release times are GMT

*Key events are in bold

WTI/USD for Monday, April 3, 2017

WTI/USD April 3 at 12:25 EST

Open: 50.56 High: 50.83 Low: 50.12 Close: 50.28

WTI USD Technical

WTI/USD was flat in the Asian and European sessions. The pair has posted losses in North American trade

• 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

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