West Texas Crude Unchanged as Crude Inventories Matches Forecast

West Texas crude is unchanged in the Wednesday session. In North American trade, WTI crude futures are trading at $53.89. Brent crude futures are trading quietly at $56.41, as the Brent premium trades at $2.52. On the release front, Crude Inventories posted a surplus of 1.5 million barrels, matching the estimate. Other key indicators were mixed. Personal Spending slipped to 0.2%, shy of the forecast of 0.3%. In the US, ISM Manufacturing PMI improved to 57.7, marking a sixth straight month that the index has risen higher.

WTI crude continues to drift between the $52-$54 range, where it has hovered since mid-December. Crude has been unable to push higher, as US Crude Inventories continue to post surpluses. On Wednesday, the indicator posted an eighth consecutive surplus, but this time the markets got it right, and the forecast of 1.5 million barrels was right on the money. The string of gains underscore a sharp increase in US shale drilling, which has offset the recent OPEC-Russia agreement, which lowered production and was supposed to raise oil prices. The OPEC-Russia deal came into effect on January 1, and although compliance has been very high, oil prices have risen only marginally since the start of the year.

There was palpable anticipation in the air ahead of President Trump’s maiden speech to Congress on Tuesday. In the end, however, the speech was short on specifics and the markets haven’t shown much reaction in the Wednesday session. Trump promised “massive” tax relief for the middle class as well as corporate tax cuts. However, he failed to provide details or even timelines on tax reform or infrastructure spending, two themes which he has discussed since the election campaign. Trump stated that he will ask Congress to approve legislation for $1 trillion in infrastructure spending, “financed through both public and private capital”. Analysts noted that although Trump touched on the protectionist theme, such as the trade imbalance with China, his tone was less belligerent than we’ve seen in the past.

WTI/USD Fundamentals

Wednesday (March 1)

• 8:30 US Core PCE Price Index. Estimate 0.3%. Actual 0.3%
• 8:30 US Personal Spending. Estimate 0.3%. Actual 0.2%
• 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%
• 9:45 US Final Manufacturing PMI. Actual 54.4
• 10:00 US ISM Manufacturing PMI. Estimate 56.2. Actual 57.7
• 10:00 US Construction Spending. Estimate 0.7%. Actual -1.0%
• 10:00 US ISM Manufacturing Prices. Estimate 68.5. Actual 68.0
• 10:30 US Crude Oil Inventories. Estimate 1.5M. Actual 1.5M
• All Day – US Total Vehicle Sales. Estimate 17.7M
• 13:00 US FOMC Member Robert Kaplan Speech
• 14:00 US Beige Book
• 18:00 US FOMC Member Lael Brainard Speech

Upcoming Key Events

Thursday (March 2)

• 8:30 US Unemployment Claims. Estimate 243K

*All release times are GMT

*Key events are in bold

WTI/USD for Tuesday, March 1, 2017

WTI/USD March 1 at 12:35 EST

Open: 53.94 High: 54.43 Low: 53.80 Close: 53.89

WTI USD Technical

WTI/USD has shown limited movement in the Wednesday session

• 52.22 remains a weak support level and could be tested in the North American session
• 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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