West Texas Crude Unchanged, OPEC Mulls Extending Cuts

West Texas crude has started the week quietly. In North American trade, WTI crude futures are trading at $48.47. Brent Crude is trading at $51.70, as the Brent premium stands at $3.23. There are no major events on the schedule. President Trump will speak at an event in Louisville, Kentucky. As well, FOMC member Charles Evans will deliver a speech in New York City.

WTI crude continues to trade under the symbolic $50 level. OPEC members hammered out an agreement to cut production late last year, and production cuts commenced on January 1. OPEC had expected the cuts to raise oil prices above $60 a barrel, but that hasn’t happened, as prices remain stuck below $50, thanks to increasing US shale production. On Monday, OPEC announced it was considering extending the production cut agreement by another 6 months, until the end of 2017. Crude hasn’t reacted to the announcement, but if the agreement is extended, crude prices could move upwards.

The Federal Reserve raised rates by a quarter-point last week, but the US dollar responded with broad losses. Why the negative reaction from the greenback? Firstly, there was disappointment in the markets with the Fed policy statement, which was more dovish than expected. The rate move was priced in at over 90 percent, and there had been speculation that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening, with possibly four rate hikes this year. Instead, Fed Chair Janet Yellen reiterated that further rate hikes would be “gradual” and the Fed made no changes to its “dot plot”, with a projection for three rate hikes in 2017. As well, the US dollar may have lost ground due to traders and investors acting on “buy on rumor, sell on fact”.

What’s next for Janet Yellen & Co? Analysts do not expect another rate move in May, while a hike in June is currently priced in at 50%. The markets will be looking for clues about the Fed’s monetary plans. A host of FOMC members will be speaking this weak, highlighted by Janet Yellen’s speech on Thursday at an event in Washington. The market will be looking for clues regarding monetary policy. In the past, Fed policymakers have presented conflicting positions, and if the market senses divisions within the Fed, the US dollar could lose ground.

Speeches Eyed as Central Banks Turn More Hawkish

WTI/USD Fundamentals

Monday (March 20)

• 13:10 US FOMC Member Charles Evans Speech
• 19:30 US President Trump Speech

*All release times are GMT

*Key events are in bold

WTI/USD for Monday, March 20, 2017

WTI/USD March 20 at 12:50 EST

Open: 48.35 High: 48.70 Low: 47.90 Close: 48.47

WTI USD Technical

WTI/USD was flat in the Asian session. The pair dipped in the European session but has recovered since North American session

• 46.54 is providing weak support
• 52.22 is the next resistance line
• Current range: 46.54 to 52.22

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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