US crude has posted gains in the Wednesday session. In North American trade, US crude futures are trading at $53.44. Brent crude futures are trading at $55.90, as the Brent premium stands at $2.46. On the release front, ADP Nonfarm Payrolls sparkled with a gain of 246 thousand, well above the forecast of 165 thousand. ISM Manufacturing PMI improved to 56.0, beating the forecast of 55.0. Later in the day, the Federal Reserve issues a rate statement and set the benchmark rate, which is expected to remain pegged at 0.50%. On Thursday, the US will release the weekly unemployment claims report.
US crude stockpiles continue to post surpluses. On Wednesday, Crude Oil Inventories soared, with a surplus of 6.5 million barrels. This was much higher than the estimate of 2.6 million. This marked a fourth straight surplus, each of which handily beat the market forecasts. US oil drilling has been on the increase, and more US production could offset the recent Russia/OPEC agreement which is aimed at reducing global oil supplies by some 2 percent. Analysts say that compliance by producers which signed the agreement has been high, but the deal, which went into effect on January 1, has not led to higher oil prices one month later.
The Federal Reserve is on center stage on Wednesday, as the bank releases a policy statement. After a historic quarter-point raise in December, which pushed rates to 0.50 percent, the Fed is expected to remain on the sidelines in its first release of 2017. What happens next? Just a few weeks ago, Fed officials were talking about a series of rates hikes in 2017 in response to a strong US economy (sound familiar? Please rewind to January 2016 for an identical message). However, after just 10 days on the job, President Trump has proven to be as unpredictable and controversial as ever. Trump has not provided any details about his economic blueprint for the country, but he has raised the rhetoric about “America first” and has already picked a fight with Mexico over a border wall and his threat to renegotiate the NAFTA trade agreement. After hinting at gradual rate increases, the Fed will likely change gears and adopt a wait-and-see attitude, watching what bills Trump gets through Congress and how the economy responds. If economic growth remains strong, a rate hike in the first half of 2017 will have to be seriously considered by the Fed. The markets have priced in a rate hike by June at 66 percent.
Fed Expected to Hold as Trump Comments Sink Dollar
WTI/USD Fundamentals
Wednesday (February 1)
- 8:15 US ADP Nonfarm Employment Change. Estimate 165K. Actual 246K
- 9:45 US Final Manufacturing PMI. Estimate 55.1. Actual 55.0
- 10:00 US ISM Manufacturing PMI. Estimate 55.0. Actual 56.0
- 10:00 US Construction Spending. Estimate 0.2%. Actual -0.2%
- 10:00 US ISM Manufacturing Prices. Estimate 66.0. Actual 69.0
- 10:30 US Crude Oil Inventories. Estimate 2.6M. Actual 6.5M
- All Day – US Total Vehicle Sales. Estimate 17.9M. Actual
- 14:00 US FOMC Statement
- 14:00 US Federal Funds Rates. Estimate <0.75%
Upcoming Key Releases
Thursday (February 2)
- 8:30 US Unemployment Claims. Estimate 251K
*All release times are GMT
*Key events are in bold
WTI/USD for Wednesday, February 1, 2017
WTI/USD February 1 at 12:10 EST
Open: 52.78 High: 53.69 Low: 52.64 Close: 53.44
WTI USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 40.57 | 46.54 | 52.22 | 58.32 | 65.05 | 72.99 |
WTI/USD was flat in the Asian and posted slight gains in European trade. The pair has edged lower in North American trade
- 52.22 remains a weak support level
- 58.32 is the next resistance line
- Current range: 52.22 to 58.32
Further levels in both directions:
- Below: 52.22, 46.54, 40.57 and 33.22
- Above: 58.32, 65.05 and 72.99
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Kenny Fisher
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