WTI/USD – US Crude Subdued in Light Holiday Trade

US crude is showing little movement in the Thursday session. In North American trade, WTI/USD futures are trading at $47.96. Brent crude futures are trading at $48.90, as the Brent premium stands at $0.94. On the release front, there are no US events on the schedule, as US markets are closed for Thanksgiving.

US crude oil inventories have posted a string of surpluses, so there was some surprise on Wednesday as inventories declined by 1.3 million. The markets had expected a small gain of 0.3 million. Crude has surged 9.7% since November 15 and briefly climbed above the $49 line on Tuesday. This marked its highest level since the end of October. Much of the spike can be attributed to expectations that OPEC will reach an agreement with non-OPEC countries to cap production and boost weak oil prices. The oil exporters will meet in Vienna on November 30, and if an agreement is reached, oil prices could surge upwards. 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 as to whether an agreement will be reached, we could see volatility in oil prices ahead of next week’s summit.

OPEC Deal Next Week Still Facing Doubts from Iran and Iraq

With a Fed rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, Trump’s economic policy remains a mystery, so what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election platforms of increased spending and less taxes have been short on content and we will have to wait for the new Trump administration to unveil a detailed economic platform. Where does this leave the Federal Reserve? The Fed 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

Thursday (November 24)

• There are no US events on the schedule

WTI/USD for Thursday, November 24, 2016

WTI/USD November 24 at 11:55 EST

Open: 48.14 High: 48.23 Low: 47.82 Close: 47.96

WTI USD Technical

• WTI/USD has been flat throughout the Thursday 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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