WTI/USD – US Crude Dips on Stronger US Dollar

US crude has lost ground in the Monday session. In North American trade, US crude futures are trading at $53.41. Brent crude futures have dropped to $56.03, as the Brent premium stands at $2.62. There are no major US events to start off the week. On Tuesday, the US will release JOLTS Job Openings, with the indicator expected to rise to 5.56 million.

The US released key employment numbers on Friday, to mixed reviews. Nonfarm payrolls jumped to 227 thousand, well above the estimate of 170 thousand. However, wage growth disappointed, as Average Hourly Earnings slipped to 0.1%, short of the forecast of 0.3%. There’s no arguing that the US economy is performing well, but there is a sense of uneasiness in the markets as Donald Trump continues to create controversy and dissent both at home and abroad. Trump has picked a fight with Mexico and his travel ban on Moslems from seven countries has created a strong backlash. Moreover, the lack of an economic policy is a major source of concern and the the post-election euphoria which sent the markets higher appears to have dissipated. The Federal Reserve also in the dark about Trump’s plans, and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar.

Another week, another surplus in US crude stockpiles. On Wednesday, Crude Oil Inventories soared, with a surplus of 6.5 million barrels. This was much higher than the estimate of 2.6 million. This marked a fourth straight surplus, each of which handily beat the market forecasts. US oil drilling has been on the increase, and more US production could offset the recent Russia/OPEC agreement which is aimed at reducing global oil supplies by some 2 percent. Analysts say that compliance by producers which signed the agreement has been high. This in itself is a noticeable achievement, given rampant cheating in previous OPEC agreements. Despite this, the agreement, which went into effect on January 1, has not led to higher oil prices one month later. A broadly stronger US dollar has weighed on oil prices, but oil continues to waver – one analyst described the recent movement of crude as “a tug of war” between bears and bulls.

U.S Payrolls Increase +227,000, Wage Growth Weakens

Market Seeks Rate Clarity, Dollar Drifts

Oil Lower as Strong USD Overrides OPEC Agreement

WTI/USD Fundamentals

Monday (February 6)

• 15:00 US Labor Market Conditions Index. Actual 1.3
• 18:30 US FOMC Member Patrick Harker Speech
• Tentative – US Loan Officer Survey

Tuesday (February 7)

• 10:00 US JOLTS Jobs Openings. Estimate 5.56M

*All release times are GMT

*Key events are in bold

WTI/USD for Monday, February 6, 2017

WTI/USD February 6 at 11:50 EST

Open: 53.91 High: 54.13 Low: 53.18 Close: 53.41

WTI USD Technical

WTI/USD was flat in the Asian session. The pair has posted losses in the European and North American sessions

• 52.22 remains a weak support level
• 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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