WTI/USD – US Crude at $53, Shrugs Off Sharp Crude Stockpiles

US crude is unchanged in the Wednesday session. In North American trade, US crude futures are trading at $52.99. Brent crude futures are trading at $55.70, as the Brent premium stands at $2.71. On the release front, CPI gained 0.6% and Core CPI rose 0.3%, as both indicators beat their estimates. Retail sales reports also beat expectations, with Core Retail Sales climbing 0.8% and Retail Sales gaining 0.4%. As well, Fed chair Janet Yellen will continue her testimony about the semiannual Monetary Policy Report before Congress. On Thursday, the US releases three key events – Building Permits, Philly Fed Manufacturing Index and unemployment claims.

As US oil rigs continue to jump into the market, US crude stockpiles are showing sharp surpluses. On Wednesday, Crude Oil Inventories jumped 9.5 million barrels, crushing the estimate of 3.7 million. This marked a sixth straight surplus, all of which beat their estimates.  The Energy Information Administration has projected that US production in 2017 will be the highest since 1970. This surge in US drilling could spell trouble for OPEC and Russia, which recently signed an agreement to lower production, in the hope of raising prices. The OPEC agreement came into effect on January 1, but US crude prices have dropped slightly during that time.

Janet Yellen is in the spotlight this week. The Fed chair testified before a Senate committee on Tuesday, and was surprisingly upfront about monetary policy, stating that she expected that the Fed would raise rates in the near future. Yellen stated that “waiting too long to remove accommodation would be unwise”, referring to the re-hot labor market and expectations that inflation would reach the Fed’s target of 2 percent. Will the Fed opt to raise rates in March or in June? The markets will be looking for clues on the timing of a move, as Yellen continues her testimony on Thursday before the House Financial Services Committee. Either way, further tightening from the Fed should translate into gains for the US dollar.

WTI/USD Fundamentals

Wednesday (February 15)

• 13:30 US CPI. Estimate 0.3%. Actual 0.6%
• 13:30 US Core CPI. Estimate 0.2%. Actual 0.3%
• 13:30 US Core Retail Sales. Estimate 0.4%. Actual 0.8%
• 13:30 US Retail  Sales. Estimate 0.1%. Actual 0.4%
• 13:30 US Empire State Manufacturing Index. Estimate 7.2. Actual 18.7
• 14:15 US Capacity Utilization Rate. Estimate 75.6%. Actual 75.3%
• 14:15 US Industrial Production. Estimate 0.1%. Actual -0.3%
• 15:00 US Fed Chair Janet Yellen Speech
• 15:00 US Business Inventories. Estimate 0.5%. Actual 0.4%
• 15:00 US NAHB Housing Market Index. Estimate 68. Actual 65
• 15:30 US Crude Oil Inventories. Estimate 3.7M. Actual 9.5M
• 17:45 US FOMC Member Patrick Harker Speaks
• 21:00 US TIC Long-Term Purchases. Estimate 191.1B

Thursday (February 16)

• 13:30 US Building Permits. Estimate 1.23M
• 13:30 US Philly Fed Manufacturing Index. Estimate 18.5 points
• 13:30 US Unemployment Claims. Estimate 243K

*All release times are GMT

*Key events are in bold

WTI/USD for Wednesday, February 15, 2017

WTI/USD February 15 at 12:10 EST

Open: 53.02 High: 53.51 Low: 52.75 Close: 52.99

WTI USD Technical

WTI/USD showed limited movement in the Asian and European sessions. The pair posted small gains but then retracted in North American trade

• 52.22 remains a weak support level
• 58.32 is the next resistance line
• Current range: 52.22 to 58.32

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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