WTI/USD – US Crude Dips, Markets Await OPEC Meeting

US crude has reversed directions and moved lower on Tuesday. In North American trade, WTI/USD futures are trading at $48.12. Brent crude futures are trading at $48.70, as the Brent premium stands at $0.58. On the release front, Existing Home Sales jumped to 5.60 million, well above the forecast of 5.47 million. As well, the Richmond Manufacturing Index improved to 4 points, beating the estimate of 1 point. Wednesday will be much busier, with a host of key releases in the US, highlighted by Core Retail Sales and the FOMC meeting minutes and Crude Oil Inventories.

Oil prices have been moving higher in recent days, and US crude climbed above the $49 line on Tuesday, its highest level since the end of October. However, crude was unable to maintain this level and has retracted close to $48. The markets are keeping a close eye on OPEC, which holds a summit in Vienna with non-OPEC countries on November 30. OPEC is working hard to reach an agreement with non-OPEC members to cap production and stabilize weak oil prices. Heavyweights Russia and Saudi Arabia are on board, but Iraq, Libya and Nigeria have all asked to be left out of a deal which would require production cuts. Previous attempts to reach a cap agreement have ended in failure, and it’s questionable whether this time will be any different. Given the uncertainty over the proposed cap agreement, we could see volatility in oil prices ahead of next week’s summit.

OPEC Deal Next Week Still Facing Doubts from Iran and Iraq

The US dollar has posted broad gains since Donald Trump’s election victory earlier this month, and with a rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, with a new government taking over the reins, what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election promises of more spending and less taxes have been vague and we will have to wait for the new Trump administration to unveil a detailed economic platform. The Federal Reserve is in favor of gradual rate hikes next year, but this assumes that the US economy continues to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new president’s economic policies.

WTI/USD Fundamentals

Tuesday (November 22)

• 10:00 US Existing Home Sales. Estimate 5.43M. Actual 5.60M
• 10:00 US Richmond Manufacturing Index. Estimate 1 point. Actual 4 points

Wednesday (November 23)

• 8:30 US Core Retail Sales. Estimate 0.6%
• 8:30 US Retail Sales. Estimate 0.7%
• 8:30 US Core Durable Goods Orders. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 241K
• 10:00 US New Home Sales. Estimate 591K
• 10:00 US Revised UoM Consumer Sentiment. Estimate 91.6
• 14:00 US FOMC Meeting Minutes

*All release times are EST

* Key events are in bold

WTI/USD for Tuesday, November 22, 2016

WTI/USD November 22 at 11:30 EST

Open: 48.63 High: 49.19 Low: 47.72 Close: 48.12

WTI USD Technical

• WTI/USD posted gains in the Asian session and has been choppy in European and North American session
• 46.54 is providing support
• There is resistance at 52.22

Further levels in both directions:

• Below: 46.54, 40.57, 33.22 and 28.71
• Above: 52.22, 58.32 and 65.05

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