Oil Flat as Markets Eye US Jobless Claims

WTI crude is little changed on Thursday, trading at $46.34 a barrel at the start of the North American session. Taking a look at US releases, today’s highlight is Unemployment Claims. We’ll also hear from three key FOMC members during the day. On Friday, we’ll get a look at a key market-mover, US Nonfarm Payrolls. 

Oil prices hit 3-week highs earlier this week, as concerns about a drop in Brazil production pushed prices higher. One US refining company suspended operations following a flood in Brazil, and a strike by Petrobas, Brazil’s state-owned oil producer, has affected about 13% of the company’s daily production. Brazil is a major oil producer, so a prolonged disruption of oil production could push prices higher. As well, oil could move higher if the markets feel that the Federal Reserve will take action and raise interest rates in December. This was underscored last week, as the hawkish Fed policy statement resulted in oil prices surging 6 percent.

Meanwhile, concerns about a global supply glut continue to weigh on oil prices. Weaker demand from China, the world’s second largest oil consumer, coupled with high Russian production has kept oil prices low. As well, OPEC members have kept production levels high, looking to squeeze out higher-cost producers. Traders should circle December 4 on their calendar, as OPEC members meet to decide whether to continue their high-production strategy which has pushed prices lower.

The US continues to release key job numbers on Thursday and Friday, and these indicators could have a sharp impact on the movement on gold prices. On Wednesday, ADP Nonfarm Payrolls slipped to 182 thousand, close to the estimate of 183 thousand. Still, the indicator slipped badly in comparison to the previous release of 200 thousand. Unemployment Claims are expected to stay rise slightly, and the real test is on Friday, with the release of the unemployment rate and Nonfarm payrolls. NFP is expected to rise sharply to 173 thousand, so the dollar could be a big winner as we wrap up the trading week. Aside from employment numbers acting as an important gauge of the US economy, this week’s releases have added significance, since strong numbers will increase the likelihood of a rate cut in December. Conversely, a poor performance will damper expectations of a move by the Fed before 2016, and this could hurt the US dollar.

WTI/USD Fundamentals

Thursday (Nov. 5)

• 12:30 US Challenger Job Cuts
• 13:30 US Unemployment Claims. Estimate 263K
• 13:30 FOMC Member William Dudley Speaks
• 13:30 US Preliminary Nonfarm Productivity. Estimate 0.1%
• 13:30 US Preliminary Unit Labor Costs. Estimate 2.2%
• 14:10 FOMC Member Stanley Fischer Speaks
• 15:30 US Natural Gas Storage. Estimate 60B
• 18:30 FOMC Member Dennis Lockhart Speaks

Upcoming Key Releases

Friday (Nov. 6)

• 13:30 US Average Hourly Earnings. Estimate 0.2%
• 13:30 US Nonfarm Employment Charge. Estimate 179K
• 13:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are GMT

WTI/USD for Thursday, November 5, 2015

WTI/USD November 5 at 12:55 GMT

WTI/USD 46.45 H: 46.63 L: 46.20

XAU/USD Technical

• WTI/USD has shown marginal movement in the Asian and European sessions.
• 47.04 has switched back to a resistance role following losses by oil on Wednesday.
• 44.30 is providing support.

Further levels in both directions:

• Below: 44.30, 42.59 and 39.87
• Above: 47.04, 49.06, 53.86 and 55.35

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