WTI/USD – West Texas Crude Dips Below $54 on Sharp Housing Report

US crude has reversed directions and recorded losses in the Wednesday session. In North American trade, WTI crude futures are trading at $53.59. Brent crude futures have dropped to $55.81, as the Brent premium stands at $2.22. On the release front, Existing Housing Sales jumped to 5.69 million, easily beating the estimate of 5.55 million. Later in the day, the Federal Reserve will publish the minutes of the January policy meeting. On Thursday, the US releases unemployment claims, with an estimate of 242 thousand. We’ll also get a look at the weekly Crude Oil Inventories report.

All eyes are on the Federal Reserve on Wednesday, ahead of the release of the Fed minutes from the most recent policy meeting. The central bank finally pressed the rate trigger in December, a full year after the previous rate hike. Last week, Fed Chair Janet Yellen strongly hinted that that another hike is on the way, leaving the markets to speculate on the timing of a hike – will it be in March or June? Even though the US economy is solid and we could see several rate hikes in 2017, market uneasiness over the Trump administration continues to grow, dampening investor appetite for risk. Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump is yet to outline a clear and coherent economic policy, although he has promised to unveil a tax package in the next few weeks. After Trump’s shock win in November, post-election euphoria boosted the markets. However, Trump’s first month in office has been marked by controversy and confusion, which has unsettled the markets.

Will US crude stockpiles continue to shoot upwards? Last week, 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 recently 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, and analysts have noted that compliance with production cuts is at a record 90 percent. Despite these impressive numbers, US crude is slightly lower since the agreement took effect.

WTI/USD Fundamentals

Wednesday (February 22)

• 10:00 US Existing Home Sales. Estimate 5.55M. Actual 5.69M
• 13:00 US FOMC Member Jerome Powell Speech
• 14:00 US FOMC Meeting Minutes

Thursday (February 23)

• 8:30 US Unemployment Claims. Estimate 242K
• 11:00 US Crude Oil Inventories

*All release times are GMT

*Key events are in bold

WTI/USD for Wednesday, February 22, 2017

WTI/USD February 22 at 11:10 EST

Open: 54.37 High: 54.60 Low: 53.48 Close: 53.59

WTI USD Technical

WTI/USD was flat in the Asian session. The pair posted considerable losses in the European session and continues to lose ground 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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