Oil Prices Flat to Start Off Week

WTI crude is unchanged on Monday, trading at $45.01 a barrel in the European session. It’s a quiet start to the week, with just one US event on the schedule. We’ll get a further look at employment data on Monday, with the release of the US Labor Market Conditions Index.

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. The result? Oil prices have plummeted by some 42% in the past year. 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.

US employment numbers have looked good in recent readings, but the outstanding Nonfarm Payroll report on Friday surprised the markets. The key indicator jumped to 271 thousand, crushing the forecast of 181 thousand. It was the indicator’s best showing since May. As well, hourly wages were up 0.4%, bringing the annual increase to 2.5%, and the unemployment rate dipped to 5.0%. These excellent readings are further signs that the US economy is close to full employment. Given that the Federal Reserve said in its recent policy statement that it employment data would be an important factor in a rate decision, the strong NFP reading has greatly increased the likelihood of a Fed hike. The US dollar posted broad gains as a result, and oil prices dropped for a third straight day on Friday. Still, a Fed rate hike should not be considered a done deal, as not all US releases have been as strong as employment data, such as manufacturing and inflation numbers. Low inflation points to slack in the economy, and the Fed policymakers will need to be assured that the US economy can withstand an interest rate hike before voting in favor of raising rates.

WTI/USD Fundamentals

Monday (Nov. 9)

• 15:00 US Labor Market Conditions Index

*Key releases are highlighted in bold

*All release times are GMT

WTI/USD for Monday, November 9, 2015

WTI/USD November 9 at 12:25 GMT

WTI/USD 45.01 H: 45.11 L: 44.29

XAU/USD Technical

• WTI/USD was flat in the Asian session. The pair has posted small gains in European trading.
• 47.04 continues as a resistance line.
• On the downside, 44.30 is under strong pressure.

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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