Crude Steady Ahead of Crucial Oil Summit

US crude prices are showing limited movement in the Friday session. Currently, WTI/USD futures are trading at $51.35. Brent crude futures are steady at $54.12, as the Brent premium stands at $2.77. Today’s key event is UoM Consumer Sentiment Index. The markets are expecting the indicator to continue to improve in December, with an estimate of 94.3 points. On Saturday, OPEC and non-OPEC nations will meet in Vienna to discuss extending the OPEC production agreement to other oil exporters.

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. OPEC and non-OPEC countries will meet on Saturday, but it’s unclear if non-OPEC nations will agree to a production cut agreement. If an agreement is reached, we could see crude prices continue climb higher next week.

The Federal Reserve will take center stage next week as the Fed meets for its monthly policy meeting on Wednesday. This will be the first meeting after Donald Trump’s election as president. More importantly of course, the markets have priced in a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first rate move by the Fed since last December, and the US dollar could respond with broad gains after a rate hike. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has stated that he plans to increase government spending and cut taxes, which could lead to higher inflation levels. The Fed has indicated that it plans to raise rates gradually in 2017, but this could change once the new administration’s economic policies become clearer.

Non-OPEC Producers Might not Be as Motivated to Join Cut

WTI/USD Fundamentals

Friday (December 9)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 94.3
• 10:00 US Final Wholesale Inventories. Estimate -0.4%
• 10:00 US Preliminary UoM Inflation Expectations

*All release times are EST

*Key events are in bold

WTI/USD for Friday, December 9, 2016

WTI/USD December 9 at 7:05 EST

Open: 51.00 High: 51.50 Low: 50.87 Close: 51.35

WTI USD Technical

• WTI/USD has shown limited movement in the Asian and European sessions
• 46.54 is providing support
• 52.22 remains a weak 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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