US Crude Futures Jump as Inventories Slide

US crude futures have jumped sharply on Wednesday, continuing the upward trend which marked the Tuesday session. US crude is trading at $37.39 per barrel in the North American session. Brent crude futures are trading at $38.66, as the Brent premium has risen to $2.27. In economic news, the EIA Crude Inventory report showed a sharp decline of 4.9 million barrels. Later in the day, the Federal Reserve will release the minutes of its last policy meeting. We’ll also hear from two Fed members, Loretta Mester and James Bullard. On Thursday, the US releases Unemployment Claims, and Janet Yellen will deliver a speech at event in New York.

US crude has surged 4% on Wednesday, boosted by an EIA report that crude stockpiles declined 4.9 million. This sharp slide surprised the markets, which had projected a surplus of 3.1 million. At the same time, this was only the second decline in 2016 reported by the EIA, which measures US crude stockpiles on a weekly basis. The world remains awash in a huge surplus of oil, and oil producers will meet in Doha on April 17 in an attempt to set production limits and stabilize oil prices. Will this meeting be more successful than earlier attempts, which led nowhere? Although senior officials are putting a positive spin on the upcoming meeting, many OPEC nations have decided not to attend, and Iran, which was recently given the green light to resume oil exports, has announced that it plans to raise its output.

The Federal Reserve remains in the headlines, although, one could argue, not for the right reasons. The markets have been treated to mixed messages from the US central bank, and this lack of communication is certainly not looked well upon the markets. Last week, Janet Yellen sent the US dollar flying on its backside, following a surprisingly dovish speech in New York. The yen posted strong gains after Yellen poured cold water on speculation of an April rate hike. Prior to her speech, several Fed members issued hawkish comments, some going as far as calling for a rate hike at the April policy meeting. Analysts will be paying close attention to the Fed minutes on Wednesday, looking for clues as to further rate projections. The markets are hoping the minutes will provide some clarity about the Fed’s monetary plans. The release of the minutes should be treated as a market-mover, and we could see some volatility in the markets following this release. In addition to the minutes, two FOMC members will deliver remarks on Wednesday.

WTI/USD Fundamentals

Wednesday (April 6)

  • 10:30 US Crude Oil Inventories. Estimate +3.1M. Actual -4.9M
  • 12:20 US FOMC Member Loretta Mester Speaks
  • 14:00 US FOMC Meeting Minutes
  • 18:30 US FOMC Member James Bullard Speaks

Upcoming Key Events

Thursday (April 7)

  • 8:30 US Unemployment Claims. Estimate 271K
  • 17:30 US Fed Chair Janet Yellen Speaks

WTI/USD for Wednesday, April 6, 2016

WTI/USD April 6 at 11:30 DST

Open: 35.89 Low: 35.89 High: 37.58 Close: 37.39

WTI/USD Technical

S3 S2 S1 R1 R2 R3
27.55 32.22 35.09 37.75 40.00 43.45
  • WTI/USD posted strong gains in the Asian session. The pair was flat in the European session and has resumed upward movement in North American trade
  • 35.09 is providing support
  • 37.75 has weakened as WTI/USD has posted strong gains. This line could break in the North American session

Further levels in both directions:

  • Below: 35.09, 32.22 and 27.55
  • Above: 37.75, 40.00, 43.45 and 46.69

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 and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.