WTI/USD – US Crude at Highest Level Since July 2015

US crude has posted slight losses in the Monday session. Currently, WTI/USD futures are trading at $53.11. Brent crude futures are steady at $55.86, as the Brent premium stands at $2.75. On the release front, there are no major events on the schedule.

It’s been a momentous December for oil exporters. Earlier in the month, OPEC surprised the markets when they hammered out an agreement to cut production. On Saturday, OPEC and 12 non-OPEC countries, led by Russia, also reached an agreement to cut production levels. The agreement between OPEC and non-OPEC oil exporters was the first since 2001, and could propel crude prices even higher. However, even with these agreements, it’s unlikely that oil prices will go through the roof. Oil exporters will target a price of about $60, since prices above that level would encourage US shale producers to enter the market, which would increase crude supply and lower prices. It’s also uncertain if oil exporters will abide by their commitments, as breaches of production quotas has been a persistent problem in the past.

Spike in Crude Push U.S Yields Through Key Levels

Oil Surges as Non-Opec Strike Output Deal

The Federal Reserve will be in the spotlight this week, as the Fed meets for its monthly policy meeting. 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 hike by the Fed since last December, and anticipation of a hike has translated into strong gains for the greenback. With Trump taking the reins in government in January, it will be interesting to see what happens early next year. 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.

WTI/USD Fundamentals

Monday (December 12)

• 13:01 US 10-year Bond Auction
• 14:00 US Federal Budget Balance. Estimate -99.5B

*All release times are EST

*Key events are in bold

WTI/USD for Monday, December 12, 2016

WTI/USD December 12 at 11:25 EST

Open: 53.76 High: 54.49 Low: 53.10 Close: 53.11

WTI USD Technical

• WTI/USD shown limited movement in the Asian and European sessions. The pair has posted losses in North American trade
• 52.22 is a weak support line
• 58.32 is the next resistance line

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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