WTI/USD – US Crude Climbs to $53, Markets Eye Retail Sales and Consumer Confidence

US crude has moved higher in the Thursday session. In North American trade, US crude futures are trading at $52.82. Brent crude futures are trading at $55.97, as the Brent premium stands at $3.15. On the release front, unemployment claims were sharp, coming in at 247 thousand. This easily beat the estimate of 266 thousand. The US releases key retail sales and consumer confidence reports on Friday.

The US labor market continues to impress, as unemployment claims beat expectations for a second straight week. However, it should be noted that unemployment rolls may be skewed around the Christmas holiday season, so analysts are not reading too much into these unusually low releases. Still, 4-week averages for unemployment claims remain at very low levels, as the employment markets remains close to capacity.

It has been a busy week for crude. The commodity dropped sharply in the Monday and Tuesday sessions, dropping some 5.5 percent over that period. Much of the decline was attributed to an increase in the number of oil rigs operating in the US and Canada. Higher oil prices have made it more profitable for North American rigs to commence production, which could offset lower production levels from OPEC and other producers. Crude has reversed directions and is rallying, on reports that Russia and Saudi Arabia lowered production as of January 1, as required by the recent oil exporters agreement. This pattern of sharp fluctuations in crude prices could continue as the markets monitor production levels and try to determine if the huge global oversupply of crude is in fact getting smaller with the recent oil exporters agreement taking effect.

More Trump, more theatrics. There was an air of anticipation ahead of Donald Trump’s press conference on Wednesday, but the event quickly turned into a spectacle rather than a platform outlying the president-elect’s plans as president. The markets were hoping to hear some specifics about Trump’s economic policy, but the president-elect didn’t comply. Instead, Trump focused on attacking the media for releasing damaging material on him, and also presented his plan to avoid business conflicts while in office. The markets were clearly disappointed with the theatrics, with the US dollar losing ground.

Fed Officials Up Next After Trump Spooks Markets

OPEC Could Expand Cut Agreement by 6 Months

Lack of Details Unwind the Trumpflation Trade

WTI/USD Fundamentals

Thursday (January 12)

• 8:30 US Unemployment Claims. Estimate 266K. Actual 247K
• 8:30 US FOMC Member Charles Evans Speech
• 8:30 US FOMC Member Patrick Harker Speech
• 8:30 US Import Prices. Estimate 0.8%. Actual 0.4%
• 10:30 US Natural Gas Storage. Estimate -150B. Actual -151B
• 13:01 US 30-year Bond Auction
• 14:00 US Federal Budget Balance. Estimate 21.0B
• 19:00 Federal Reserve Chair Janet Yellen Speech

Friday (January 13)

• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US PPI. Estimate 0.1%
• 8:30 US Retail Sales. Estimate 0.5%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.6

*All release times are EST

* Key events are in bold

WTI/USD for Thursday, January 12, 2017

WTI/USD January 12 at 11:50 EST

Open: 51.00 High: 52.34 Low: 50.75 Close: 52.82

WTI USD Technical

• WTI/USD was flat in the Asian and Europeans sessions. The pair has posted considerable gains in the North American session
• 52.22 is 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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