WTI/USD – US Crude Sharply Higher Ahead of Key OPEC Meeting

US crude has started the week with strong gains. In Monday’s North American session, WTI/USD futures are trading at $46.83. Brent crude futures are trading at $48.12, as the Brent premium stands at $1.29. On the release front, there are no US events on the schedule. On Tuesday, the US will release Preliminary GDP for the third quarter, with the markets expecting a sharp gain of 3.0%. The other key indicator is CB Consumer Confidence, which is expected to improve to 101.3 points.

OPEC members will meet in Vienna on Wednesday, hoping to reach an agreement to cap production in order to boost oil prices. OPEC wants to include non-OPEC countries as well, and Russia has come out in favor of a freeze. However, it’s far from certain that OPEC members will reach an agreement. 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 as to whether an agreement will be reached, we could see continue to see volatility from oil prices during the week.

The US economy continues to roll and consumer confidence has been an important factor, as higher confidence levels usually translate into increased consumer spending. Last week, UoM Consumer Sentiment jumped to 93.8 points, beating the forecast of 91.6 points. This reading was the indicator’s highest level since May. CB Consumer Confidence follows on Tuesday and is expected to follow suit with a higher reading for November.

The Federal Reserve appears poised to raise interest rates by a quarter-point in December, with the odds of a rate hike at 93 percent. The Fed minutes were released on Thursday, indicating that policymakers felt it appropriate to raise rates “relatively soon”. Earlier this month, Fed Chair Janet Yellen used the same phrase in her testimony before a congressional committee. The minutes indicated that some members argued that the Fed needs to raise rates in December in order to preserve the bank’s credibility – despite some broad hints of rate hikes during 2016, the Fed has stayed on the sidelines throughout 2016, causing significant disappointment and frustration in the markets.

WTI/USD Fundamentals

Monday (November 28)

• There are no US releases on the schedule

Tuesday (November 29)

• 8:30 US Preliminary GDP. Estimate 3.0%
• 10:00 US CB Consumer Confidence. Estimate 101.3 points

*All release times are EST

*Key events are in bold

WTI/USD for Monday, November 28, 2016

WTI/USD November 28 at 11:30 EST

Open: 45.44 High: 47.33 Low: 45.37 Close: 46.83

WTI USD Technical

• WTI/USD posted slight gains in the Asian session and leveled off in European trade. The pair has resumed its upward movement in the North American session
• 46.54 is a fluid line and is currently a weak support level
• 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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