US Crude Steady, Jobless Claims Shine

US crude futures are steady on Thursday, trading at $43.21 per barrel in the North American session. Brent crude futures are trading at $45.22, as the Brent premium stands at $2.00. In economic news, Unemployment Claims slid to 245 thousand, well below expectations. However, the Philly Fed Manufacturing Index posted a decline of 1.8 points, much lower than the estimate.

Crude prices have shown strong volatility this week. An oil summit in Qatar on Sunday, which included OPEC and non-OPEC nations, ended in disarray, without any agreement being reached by the participants. There was optimism that the parties might agree not to exceed current production levels, but hopes for even this limited move were dashed when Saudi Arabia insisted that any agreement had to cover Iran. When this didn’t materialize, the participants closed up shop and returned home. The failure of the talks could severely undermine the credibility of oil producers, and the huge oversupply of crude could worsen if Saudi Arabia and other suppliers decide to increase output. US crude prices initially fell after the meeting, but have since rebounded strongly. US crude has skyrocketed some 13 percent this week, moving above the $43 level.

Oil producers may have failed to reach an agreement in Qatar, but they managed to cause plenty of volatility in the currency markets. Commodity currencies like the Canadian and Australian dollars followed the movement of oil, posting losses immediately after the inconclusive meeting, but have since posted sharp gains. A strike by Kuwaiti oil workers also contributed to volatility in the oil markets. The three-day strike, which ended on Tuesday, significantly disrupted oil production in Kuwait, a major oil producer.

The US labor market continues full steam ahead, as the weekly unemployment claims indicator fell to 247 thousand, well below the forecast of 265 thousand. This was the lowest weekly count since November 1973, and the four-week indicator, which is considered more accurate, also dropped compared to the previous release. The good news was tempered by a disappointing key manufacturing report. The Philly Fed Manufacturing Index surprised the markets with a decline of -1.6 points, as the estimate stood at 8,1 points. This reading marked the third decline in four readings, as the manufacturing sector remains a weak area of the US economy. Uncertainty in global economic conditions has lead to weaker demand for US goods and put the squeeze on domestic manufacturers.

WTI/USD Fundamentals

Thursday (April 21)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 8.1. Actual -1.6
  • 8:30 US Unemployment Claims. Estimate 265K. Actual 247K
  • 9:00 US HPI. Estimate 0.4%. Actual 0.4%
  • 10:00 US CB Leading Index. Estimate 0.4%. Actual 0.2% 
  • 10:30 US Natural Gas Storage. Estimate 6B. Actual 7B 

*Key events are in bold

*All release times are EDT

WTI/USD for Thursday, April 21, 2016

WTI/USD April 21 at 11:20 EDT

Open: 43.90 Low: 43.06 High: 44.49 Close: 43.21

WTI/USD Technical

S3 S2 S1 R1 R2 R3
35.09 37.75 40.00 43.45 46.69 50.13
  • WTI/USD was uneventful in the Asian and European sessions. The pair has posted losses in North American trade.
  • 40.00 is providing support
  • There is weak resistance at 43.45. This line could break in the North American session

Further levels in both directions:

  • Below: 40.00, 37.75, 35.09 and 32.22
  • Above: 43.45, 46.69 and 50.13

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.