WTI/USD – Crude Unchanged Ahead of Yellen Speech, Preliminary GDP Report

US crude has been up-and-down throughout the week, but has taken a breather and is unchanged on Thursday. In the North American session, WTI/USD futures are trading at $46.91 per barrel. Brent crude futures are trading at $49.47, as the Brent crude premium has widened to $2.56. In economic news, US durable goods reports easily beat expectations and unemployment claims dropped and beat the estimate. On Friday, the US releases Preliminary GDP and we’ll also hear from Federal Reserve chair Janet Yellen at the Jackson Hole conference.

After some dismal readings in the second quarter, US durable goods recovered in July. Core Durable Goods Orders rebounded after two straight declines, posting an excellent gain of 1.5%. This easily beat the forecast of 0.4%. Durable Goods Orders also impressed with a sharp gain of 4.4%, compared to the forecast of 3.4%. This marked the strongest gain since January. The strong readings point to stronger demand for durable goods, which should translate into increased investment and hiring in the business sector. There was more good news on the labor front, as unemployment claims dropped to 261 thousand, its third decline in as many weeks.

After a mostly uneventful week, the markets will shift focus to Jackson Hole, Wyoming, where central bankers and other senior policymakers are gathered for a 3-day summit. The markets will be looking for hints from Federal Reserve chair Janet Yellen regarding the Fed’s monetary plans, particularly the timing of a rate hike. Federal policymakers are divided over a rate hike, as the US labor market is red-hot, but inflation levels remains very low. Fed chair Janet Yellen will address the conference on Friday, and the markets will be looking for some feedback about the Fed’s take on the US economy – particularly the labor market and the inflation picture. As well, the US will release Preliminary GDP for the second quarter. In July, a soft Advance GDP sent the dollar downwards, as the economy expanded 1.2%, well short of the forecast of 2.6%. The estimate for the Preliminary GDP report stands at 1.1 percent. A better reading than expected, which would signify stronger economic growth from the US economy, could send oil prices to higher levels.

WTI/USD Fundamentals

Thursday (August 25)

• 8:30 US Unemployment Claims. Estimate 265K. Actual 261K
• 8:30 US Core Durable Goods Orders. Estimate 0.4%. Actual 1.5%
• 8:30 US Durable Goods Orders. Estimate 3.4%. Actual 4.4%
• 9:45 US Flash Services PMI. Estimate 51.9. Actual 50.9
• 10:30 US Natural Gas Storage. Estimate 22B. Actual 11B
• All Day – Jackson Hole Symposium

Friday (August 26)

• 8:30 US Preliminary GDP. Estimate 1.1%
• 10:00 Federal Reserve Chair Janet Yellen Speaks
• 10:00 US Revised UoM Consumer Sentiment. Estimate 90.6
• All Day – Jackson Hole Symposium

*Key events are in bold

*All release times are EDT

WTI/USD for Thursday, August 25, 2016

WTI/USD August 25 at 11:00 EDT

Open: 46.79 High: 47.28 Low: 46.42 Close: 46.91

WTI USD Technical

• WTI/USD was flat in the Asian and European sessions. The pair has posted small gains in North American trade
• 46.69 is a weak support line. It could break in the North American session
• There is resistance at 50.13

Further levels in both directions:

• Below: 46.69, 43.45 and 39.32
• Above: 50.13, 53.50 and 56.50

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