WTI/USD – US Crude Dips as IEA Predicts Higher US Output

US crude has moved slightly lower on Wednesday. In the North American session, US crude futures are trading at the round number of $52.00. Brent crude futures are trading at $54.83, as the Brent premium stands at $2.83. In economic news, US Core CPI and CPI data matched expectations. On Thursday, the US will release three key indicators – Building Permits, Philly Fed Manufacturing Index and Unemployment Claims.

OPEC released its monthly production report on Wednesday, which found that production was slightly lower in December than in November. Markets will be keenly interested in the January data, as the agreement to cut output between OPEC, Russia and other producers took effect on January 1. Saudi Arabia and other producers say they are strictly adhering to the agreement, but experts remain skeptical, as producers have failed to honor their quotas in previous agreements. Meanwhile, higher oil prices have made the market more attractive for US shale producers, and on Wednesday, the International Energy Agency predicted a “significant” boost to US output as a result of the OPEC agreement. US crude has responded with losses in the Wednesday session. We’ll get a look at US Crude Inventories on Thursday. Last week, the indicator posted a large surplus of 4.1 million barrels, and another strong gain could send crude prices down further.

Donald Trump’s shocking election victory in November was warmly received by the markets, as the stock market and the US dollar posted strong rallies. However, confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while continuing to tangle with the media and fire off controversial Twitter messages. Trump’s comments earlier this week about the US dollar helped send the currency lower. In an interview with the Wall Street Journal on Monday, Trump complained that the currency was “too strong”. These sentiments were echoed on Tuesday by Trump advisor Anthony Scaramucci. Speaking at the World Economic Forum in Davos, Scaramucci warned that “we must be careful of a rising dollar.” Trump broke with the unwritten rule that US presidents refraining from commenting on the US dollar, and his comments could be a taste of more to come, as Trump is unlikely to veer from his habit of making controversial comments that could affect market movement.

WTI/USD Fundamentals

Wednesday (January 18)

• 8:30 US CPI. Estimate 0.3%. Actual 0.3%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
• 9:15 US Capacity Utilization Rate. Estimate 75.6%. Actual 75.5%
• 9:15 US Industrial Production. Estimate 0.8%. Actual 0.8%
• 10:00 US NAHB Housing Market Index. Estimate 69 points. Actual 67 points
• 11:00 US FOMC Member Neel Kasharki Speech
• 14:00 US Beige Book
• 15:00 US Federal Reserve Chair Yellen Speech
• 16:00 US TIC Long-Term Purchases. Estimate 21.3B

Upcoming Key Events

Thursday (January 19)

• 8:30 US Building Permits. Estimate 1.22M
• 8:30 US Philly Fed Manufacturing Index. Estimate 16.3
• 8:30 US Unemployment Claims. Estimate 252K
• 11:00 US Crude Oil Inventories

WTI/USD for Wednesday, January 18, 2017

WTI/USD January 18 at 12:25 EST

Open: 52.48 High: 52.79 Low: 51.21 Close: 52.00

WTI USD Technical

• WTI/USD was flat in the Asian session. The pair recorded posted strong losses in European trade but has partially recovered in the North American session
• 46.54 is providing support
• 52.22 is fluid. Currently it is a weak resistance line

Further levels in both directions:

• Below: 46.54, 40.57 and 33.22
• Above: 52.22, 58.32, 65.05 and 72.99

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