WTI/USD – Crude Steady as Crude Inventories Post Surplus

US crude futures have posted small gains in the Thursday session. In North American trade, US crude is trading at $53.96. Brent crude futures are trading at $56.25, as the Brent premium stands at $2.31. On the release front, Crude Inventories posted a small surplus of 0.6 million, compared to the forecast of a decline of 1.3 million. On the labor front, jobless claims dropped to 265 thousand, easily beating the forecast of 277 thousand.

Crude Inventories posted a surplus of 0.6 million barrels, marking a second straight surplus after four consecutive declines. Crude prices remain strong, as the recent agreement between OPEC and other oil exporters, which calls for production cuts, is expected to begin on January 1. Under the agreement, production is expected to drop by 1.8 million barrels per day. Saudi Arabia, OPEC’s largest producer, has agreed to bear most of the cuts in production. Compliance has long been a problem for OPEC, as many members have simply disregarded their production quotas, helping to sustain the global oversupply which production agreements are supposed to reduce. Even if oil exporters abide by their commitments under the deal, it’s questionable if crude prices will rise substantially, as US shale producers are likely to step in if oil prices move above the $60 level.

With the US economy expanding at an impressive rate, US consumers are brimming with confidence, in what analysts are describing as a post-election surge in optimism. Recent consumer confidence surveys are pointing upwards, as the US consumer is optimistic that economic conditions will continue to improve under the incoming Trump administration. The CB Consumer Confidence report surged in December to 113.7, its highest level since August 2001. This reading comes on the heels of UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. Both of these well-respected surveys found that consumers are confident that continuing economic growth will create new jobs and raise incomes. Trump’s economic platform remains short on details, but he has promised to cut taxes while increasing public spending. If Trump manages to implement both of these goals, the US economy could heat up and also help global growth pick up speed.

WTI/USD Fundamentals

Thursday (December 29)

• 8:30 US Unemployment Claims. Estimate 277K. Actual 265K
• 8:30 US Goods Trade Balance. Estimate -61.5B. Actual -65.3B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.1%. Actual 0.9%
• 10:30 US Natural Gas Storage. Estimate -219B. Actual -237B
• 11:00 US Crude Oil Inventories. Estimate -1.3M. Actual +0.6M

*All release times are EST

*Key events are in bold

WTI/USD for Thursday, December 29, 2016

WTI/USD December 29 at 12:00 EST

Open: 53.64 High: 54.07 Low: 53.64 Close: 53.96

WTI USD Technical

• WTI/USD was flat in the Asian session. The pair has shown limited movement in the European and North American sessions
• 52.22 remains a weak support level
• 58.32 is the next resistance line

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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