West Texas Crude – Crude Inventories Surplus Sends WTI to 14-Week Low

West Texas crude has lost ground on Wednesday, continuing the downward movement which marked Tuesday trading. In the North American session, WTI crude futures are trading at $47.78. Brent Crude futures have dipped to $50.39, as the Brent premium stands at $2.61. On the release front, housing and inflation data was a disappointment. Existing Home Sales dropped to 5.48 million, missing the forecast of 5.59 million. As well, the House Price Index fell to a flat 0.0%, short of the estimate of 0.4%. On Thursday, the US releases unemployment claims.

WTI crude has dropped to a low of $47.05 on Wednesday, its lowest level since the end of November. Crude headed lower after Crude Oil Inventories posted a strong surplus of 5.0 million barrels, crushing the estimate of 1.9 million. The weekly indicator has recorded only two declines in 2017, as US oil drillers continue to enter the market and ratchet up US oil production. This, together with increased US shale production, has more than offset OPEC’s production cuts. On Monday, OPEC announced it was considering extending the production cut agreement by another 6 months, until the end of 2017.

With little in the way of key fundamentals this week, the markets are focusing on comments from FOMC members who will be speaking this week, including Fed Chair Janet Yellen on Thursday. On Monday, Chicago Fed President Charles Evans said he expects the Fed to raise rates two more times this year. This echoes the Fed’s dot point plot as well as last week’s rate statement. Although three rate hikes in 2017 would be no mean feat, the markets would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach has disappointed the markets, as the US dollar continues to post broad losses.

WTI/USD Fundamentals

Wednesday (March 22)

• 9:00 US HPI. Estimate 0.4%. Actual 0.0%
• 10:00 US Existing Home Sales. Estimate 5.59M. Actual 5.48M
• 10:30 US Crude Oil Inventories. Estimate 1.9M. Actual 5.0M

Upcoming Key Events

Thursday (March 23)

• 8:30 US Unemployment Claims. Estimate 240K
• 8:45 US Fed Chair Janet Yellen Speech

*All release times are GMT

*Key events are in bold

WTI/USD for Wednesday, March 22, 2017

WTI/USD March 22 at 13:10 EST

Open: 48.18 High: 48.22 Low: 47.05 Close: 47.62

WTI USD Technical

WTI/USD edged downwards in the Asian and European sessions. The pair is choppy in North American trade

• 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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