WTI/USD – US Crude Shrugs off Decline in Crude Inventories

US crude prices have ticked lower in the Wednesday session, but remain above the symbolic level of $50. In North American trade, WTI/USD futures are trading at $50.48. Brent crude futures are steady at $53.52, as the Brent premium stands at $3.04. Crude Oil Inventories declined by 2.4 million barrels, well below expectations. JOLTS Job Openings improved to 5.53 million, matching the forecast. On Thursday, the US releases unemployment claims, with the indicator expected to rise to 272 thousand.

US crude inventories posted a second straight decline last week. The indicator declined by 2.4 million, a much sharper drop than the forecast of 1.4 million. It marked the sharpest decline in stockpiles since mid-October. Oil prices have surged since OPEC reached a production cut agreement last week, but members will have to honor their quotas in order for the deal to stabilize oil prices. OPEC members have set record productions levels in recent months, and non-OPEC members such as Russia have also been producing at very high levels. This means that even with the OPEC agreement, the worldwide glut of oil will remain for some to come.

The Federal Reserve holds its monthly policy meeting next week and the markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and sentiment towards the US dollar remains high. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has said he will increase government spending and cut taxes. This could lead to higher inflation levels, which means the Fed may need to adjust its outlook.

OPEC Output Set Record High Ahead of Cut

WTI/USD Fundamentals

Wednesday (December 7)

• 10:00 US JOLTS Jobs Openings. Estimate 5.53M. Actual 5.53M
• 10:30 US Crude Oil Inventories. Estimate -1.4M. Estimate -2.4M
• 15:00 US Consumer Credit. Estimate 17.5B

Thursday (December 8)

• 8:30 US Unemployment Claims. Estimate 272K

*All release times are EST

*Key events are in bold

WTI/USD for Wednesday, December 7, 2016

WTI/USD December 7 at 11:50 EST

Open: 50.84 High: 51.20 Low: 49.81 Close: 50.48

WTI USD Technical

• WTI/USD was flat in the Asian session. The pair posted small gains in European trade but then retracted. WTI/USD has posted small gains in the North American session.
• 46.54 is providing support
• 52.22 is the next resistance line

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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