WTI/USD – US Crude Higher Despite Sharp Rise in Inventories

US crude has moved higher in the Wednesday session. In North American trade, US crude futures are trading at $52.37. Brent crude futures are trading at $55.30, as the Brent premium stands at $2.93. It’s a very quiet day on the release front. Crude Oil Inventories posted a sharp surplus of 13.8 million barrels, crushing the estimate of 2.7 million. On Thursday, the US releases the weekly unemployment claims report, which is expected to rise to 249 thousand.

Another crude stockpile report, another surplus. Only this time, Crude Oil Inventories made a splash, soaring 13.8 million barrels, according to the Energy Information Administration (EIA). The indicator has recorded five straight surpluses, easily exceeding forecasts on each occasion. The huge gain also marked the highest surplus since late October. US crude started the day at 3-week lows, but surprisingly has posted gains on Wednesday, despite the inventories report. Crude did post sharp losses on Tuesday, following the release of the API inventories report, which predicted a surplus of 14.2 million, compared to a forecast of 2.38 million. US crude prices are down 2.7 percent this week, as US oil production continues to increase. The EIA says that US production in 2017 will be the highest since 1970, so cuts from OPEC and Russia may not lead to higher oil prices, due to the steady increase in US crude production.

President Donald Trump continues to create controversies on an almost daily basis, and his brash and undiplomatic style has not endeared him to the markets. Moreover, the lack of an economic policy from the new administration is a major source of concern and the the post-election euphoria which sent the markets higher has dissipated. The Federal Reserve, which had trumpeted that it was planning a series of hikes in 2017, was more cautious in its recent rate statement and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar and could weigh on oil prices.

Oil Lower as Strong USD Overrides OPEC Agreement

EIA Reports 13.8 Million Barrels Last Week

WTI/USD Fundamentals

Wednesday (February 8)

• 10:30 US Crude Oil Inventories. Estimate 2.7M. Actual 13.8M
• 13:01 US 10-y Bond Auction

Thursday (February 9)

• 8:30 US Unemployment Claims. Estimate 249K

*All release times are GMT

*Key events are in bold

WTI/USD for Wednesday, February 8, 2017

WTI/USD February 8 at 12:30 EST

Open: 51.91 High: 52.67 Low: 51.38 Close: 52.37

WTI USD Technical

WTI/USD was flat in the Asian session. The pair has posted losses in the European and North American sessions

• 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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