WTI/USD – Crude Edges Lower on Oversupply Worries

US crude prices have posted slight losses to start off the week. In Monday’s North American session, WTI/USD futures are trading at $44.96 per barrel. Brent crude is trading at $46.52, as the Brent premium stands at $1.56. On the release front, it’s a slow start to the week, with just two minor events on the schedule. NAHB Housing Market Index showed little change, posting a reading of 59 points. TIC Long-Term Purchases will be published later in the day. On Tuesday, the US will release Building Permits, a key event.

Crude prices have dipped as the markets concerns remain over the oversupply of US crude. Drilling activity in the US continues to increase, as oilfield services provider Baker Hughes reported on Friday that the number of US drilling rigs increased for a third straight week. This is raising concerns that higher production levels in the US will exacerbate supply levels and push down crude prices. In late June, US crude broke above the $50 level, but has since dropped about 10 percent and remains under pressure.

US consumer indicators were on center stage on Friday, and the numbers were a mixed bag. Consumer inflation reports posted small gains of 0.2%, as inflation levels remain soft. There was better news on the consumer spending front, as Core Retail Sales posted a strong gain of 0.7%, beating the estimate. The UoM Consumer Sentiment report dipped below the 90-point level for the first time in three months, missing expectations. The Federal Reserve is unlikely to raise rates before September at the earliest, unless there is some strong improvement in economic data, particularly inflation and wage growth, which remain at low levels.

WTI/USD Fundamentals

Monday (July 18)

• 10:00 US NAHB Housing Market Index. Estimate 60 points. Actual 59 points
• 16:00 US TIC Long-Term Purchases. Estimate 31.6B

Upcoming Key Releases

Tuesday (July 19)

• 8:30 US Building Permits. Estimate 1.15M

*Key events are in bold

*All release times are EDT

WTI/USD for Monday, July 18, 2016

WTI/USD July 18 at 11:15 EDT

Open: 45.86 High: 46.08 Low: 44.87 Close: 44.96

WTI/USD Technical

• WTI/USD was flat in the Asian session. The pair recorded considering losses in the European trade and the downward trend continues in North American trade
• There is resistance at 46.69
• 43.45 is providing support

Further levels in both directions:

• Below: 43.45, 39.32 and 35.25
• Above: 46.69, 50.13 and 53.50

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