WTI/USD – US Crude Surges as OPEC Reaches Output Agreement

Oil prices have risen sharply on Wednesday, as OPEC members reached a deal on production cuts at a meeting in Vienna. In North American trade, WTI/USD futures are trading at $48.70. Brent crude futures have punched past the $50 level, trading at $51.64. The Brent premium has widened to $2.94. On the release front, ADP Nonfarm Employment Change jumped to 216 thousand, well above the forecast of 161 thousand. On Thursday, the US releases unemployment claims and the ISM Manufacturing PMI.

There was the usual drama and fluctuations in oil prices ahead of another OPEC meeting, but this time there was a surprise ending. OPEC announced that it had reached a production cut agreement. One of the major sticking points had been Iran’s insistence to maintain output at pre-sanction levels. Saudi Arabia swallowed hard and accepted Iran’s demand, paving the path for a production agreement by OPEC since 2008. US crude has surged 6.6 percent in the Wednesday session and is trading above the $48 level. The agreement should reduce the worldwide glut of oil and stabilize oil prices, on the assumption that OPEC members do not cheat on their production quotas. US crude also received a boost from Crude Oil Inventories, which surprised with a decline of 0.9 million barrels. The market had expected a surplus of 0.7 million.

Strong consumer confidence has been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

US Q3 GDP Revised Upward on Consumer Spending

Saudi’s Accept Big Hit in OPEC Output Deal

WTI/USD Fundamentals

Wednesday (November 30)

• All Day – OPEC Meetings
• 8:15 US ADP Nonfarm Employment Change. Estimate 161K. Actual 216K
• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.5%. Actual 0.3%
• 8:30 US Personal Income. Estimate 0.4%. Actual 0.6%
• 9:45 US Chicago PMI. Estimate 52.1. Actual 57.6
• 10:00 US Pending Home Sales. Estimate 0.3%. Actual 0.1%
• 10:30 US Crude Oil Inventories. Estimate 0.7M. Actual -0.9M
• 11:45 US FOMC Member Jerome Powell Speech
• 14:00 US Beige Book

Upcoming Key Events

Thursday (December 1)

• 8:30 US Unemployment Claims. Estimate 252K
• 10:00 US ISM Manufacturing PMI. Estimate 52.1

*All release times are EST

*Key events are in bold

WTI/USD for Wednesday, November 30, 2016

WTI/USD November 30 at 11:20 EST

Open: 45.38 High: 49.11 Low: 45.38 Close: 48.70

WTI USD Technical

• WTI/USD was flat in the Asian session. The pair posted sharp gains in the European session and continues to move upwards in the North American session
• 46.54 has switched to a support role
• There is resistance at 52.22

Further levels in both directions:

• Below: 46.54, 40.57, 33.22 and 26.06
• Above: 52.22, 58.32 and 65.05

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