WTI/USD – US Crude Slides, Surges as Trump Victory Shakes Up Global Markets

On a day of sharp volatility in the markets, US crude has also shown strong movement. In the Wednesday’s North American session, WTI/USD futures are trading at $45.67 as US crude is up about 1 percent on the day. US crude declined 4.3% in a tumultuous Asian session, which saw the US dollar post broad losses. However, crude has recovered in the European and North American sessions and could break above the $46 level. Brent crude futures are trading at $46.63, as the Brent premium has narrowed to $0.94. The volatility we are seeing on the markets was triggered by the stunning news that Donald Trump had emerged victorious in the US presidential election. Trump garnered 276 electoral votes, beating Hillary Clinton who won 218 electoral votes. On the economic front, US Crude Inventories posted a surplus of 2.4 million, well above the forecast of 1.3 million. On Thursday, the US will publish unemployment claims, with the estimate standing at 267 thousand.

As the markets begin to digest the idea of a President Donald J. Trump, the markets remain volatile on Wednesday. US crude declined 4.3% in a tumultuous Asian session, which saw the US dollar post broad losses. However, crude has recovered in the European and North American sessions and could break above the $46 level. Hillary Clinton was widely expected to cruise to the White House, as pundits and the American media gave Donald Trump little chance of winning (a Reuters release on Monday said that Clinton had a 90 percent  chance of winning). Trump’s upset election victory has stunned global markets, which are in turmoil on Wednesday as the unthinkable has become reality. The volatility that we’re seeing indicates that global markets were poorly positioned heading into the vote, overconfident that voters would reject Trump and hand Clinton a victory.

The news of a Trump electoral victory also shook up the odds of a December rate hike by the Federal Reserve. The odds dropped as low as 40 percent earlier in the day, but have recovered and actually increased. Currently, the markets have priced in at quarter-point hike at 76 percent, up from 71 percent just prior to the election. We could see further movement in the odds in the aftermath of the Trump victory, but it’s looking quite positive for a rate hike, which would mark the first rate move by the Fed since last December.

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WTI/USD Fundamentals

Wednesday (November 9)

• 10:00 US Final Wholesale Inventories. Estimate 0.2%. Actual 0.1%
• 10:30 US Crude Oil Inventories. Estimate 1.3M. Actual 2.4 million
• 13:01 US 10-year Bond Auction

Thursday (November 10)

• 8:30 US Unemployment Claims. Estimate 267K

*All release times are EDT

*Key events are in bold

WTI/USD for Wednesday, November 9, 2016

WTI/USD November 9 at 11:50 EDT

Open: 45.02 High: 45.80 Low: 43.09 Close: 45.67

WTI USD Technical

• WTI/USD posted sharp losses in the Asian session. The pair reversed directions in the European session and has continued to move higher in North American trade
• 40.57 is providing support
• 46.54 is a weak resistance line. It could break in the North American session

Further levels in both directions:

• Below: 40.57, 33.22 and 28.71
• Above: 46.54, 52.22 and 58.32

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