WTI/USD – US Crude Unchanged Ahead of Fed Minutes

US crude prices are steady on Wednesday, after losing ground in the Tuesday session. In North American trade, US crude futures are trading at $52.69. Brent crude futures are trading at $56.03, as the Brent premium has widened to $3.44.

Oil prices slipped 2.6 percent on Tuesday, as the US dollar posted broad gains. With the markets waiting to see if promised OPEC production cuts reduce global oversupply of crude, we could see further volatility from crude early in the year. In December, OPEC surprised the markets as members agreed to cut or limit production levels. This was quickly followed by a deal with Russia and other oil producers to cut production. These reductions took effect on January 1, but lower production is by no means a sure thing, as oil producers have often cheated on their production quotas in the past. Next up is Crude Oil Inventories, which has surprised the markets with two consecutive surpluses. However, the estimate for the upcoming release stands at -1.8 million. If the release is within expectations, US crude could rebound on Thursday.

All eyes are on the Federal Reserve, which will release the minutes from the December policy meeting. At that meeting, the Fed finally raised rates for the first time since December 2015. Analysts will be combing through the minutes, looking for clues regarding future monetary policy. The US economy is performing very well, and the markets are hopeful that this continues as Donald Trump takes office. Trump’s economic policies remain sketchy, although he has promised to increase fiscal spending while lowering taxes. If the economy’s positive momentum continues, the Fed could be inclined to raise rates another quarter point in order to prevent the economy from overheating. If the markets remain bullish about further rate hikes, the US dollar could continue to climb in early 2017.

How Much Juice Has the Big Dollar Got?

WTI/USD Fundamentals

Wednesday (January 4)

• All Day – US Total Vehicle Sales. Estimate 17.8M
• 14:00 US FOMC Meeting Minutes

Thursday (January 5)

• 8:15 US ADP Nonfarm Employment Change. Estimate 171K
• 8:30 US Unemployment Claims. Estimate 262K
• 10:00 US ISM Non-Manufacturing PMI. Estimate 56.6

*All release times are EST

* Key events are in bold

WTI/USD for Wednesday, January 4, 2017

WTI/USD January 4 at 11:40 EST

Open: 52.62 High: 52.96 Low: 52.16 Close: 52.69

WTI USD Technical

• WTI/USD has shown little movement in the Wednesday session
• 52.22 remains a weak support level
• 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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