US Crude Steady, Markets Eye ISM Non-Manufacturing PMI

US crude futures are showing limited movement on Monday, trading at $36.67 per barrel in the North American session. Brent crude futures are trading at $38.22, as the Brent premium has risen to $1.55. In economic news, it’s a quiet start to the week. US Factory Orders slipped by 1.7 percent, lower than the forecast of a decline of 1.5 percent.

US crude registered sharp losses last week, dropping 9.7 percent. The commodity is currently trading at 3-week lows, and we could see the commodity continue to drop, as oil prices remain under pressure due to a huge oversupply. The weekly EIA Inventory reports, which measure US crude stockpiles, have shown only one decline in 2016. Oil producers will meet in Qatar later in the month to discuss capping output, but it’s questionable if this meeting will be any more successful than previous attempts which led nowhere. Many OPEC nations have announced that they will not be attending, and crude output from OPEC rose in March, as members continue to adopt an “every man for himself” approach.

The US labor market continues to impress, as Friday’s employment numbers were solid. Nonfarm Payrolls came in at 215 thousand, above the estimate of 205 thousand. The unemployment rate edged up to 5.0%. Average Hourly Earnings posted a small gain of 0.3%, ahead of the estimate of 0.2%.

The US dollar recorded broad losses last week, dragging crude oil prices with it. The greenback sagged after Janet Yellen’s very dovish comments last week at a speech in New York. Yellen warned of risks to the US economy from uncertainty in the global markets and the slowdown in China, and poured cold water on speculation of an April rate hike. With the US economy in good shape, why did Yellen sound ultra-dovish in her comments? Yellen was likely reacting to comments by several Fed members prior to her speech, which were very hawkish in tone, some going as far as calling for a rate hike this month. The contradictory messages coming out of Fed points to a split in the FOMC concerning monetary policy, although Yellen is likely to have the last word. Will the Fed minutes back up Yellen’s dovish outlook, or will we see disagreement amongst Fed policymakers? Analysts will be paying close attention to the Fed minutes on Wednesday, looking for clues as to further rate projections. Traders should be prepared for some volatility after the release of the minutes.

WTI/USD Fundamentals

Monday (April 4)

  • 10:00 US Factory Orders. Estimate -1.5%. Actual -1.7%
  • 10:00 US Labor Market Conditions Index. Actual -2.1 points

Upcoming Key Events

Tuesday (April 5)

  • 10:00 US ISM Non-Manufacturing PMI. Estimate 54.1 points
  • 10:00 US JOLTS Job Openings. Estimate 5.57M

WTI/USD for Monday, April 4, 2016

WTI/USD April 4 at 11:15 DST

Open: 36.68 Low: 36.78 High: 36.50 Close: 36.60

WTI/USD Technical

S3 S2 S1 R1 R2 R3
27.55 32.22 35.09 37.75 40.00 43.45
  • WTI/USD was flat in the Asian session. The pair posted gains in the European session and has been choppy in North American trade
  • 35.09 is providing support
  • There is resistance at 37.75

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.