Oil Unchanged at $44

WTI crude is unchanged on Tuesday, trading at $43.98 a barrel early in the North American session.  In economic news, there are no major releases out of the US for a second straight day, as traders continue to look for cues which could affect oil prices. The NFIB Small Business Index met expectations, while Import Prices disappointed with a fifth straight decline.

Oil prices on world markets remain depressed, as concerns about a global supply glut abound. 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 keep an eye on the OPEC meeting in early December, 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. The positive news continued on Monday, as the Labor Market Conditions Index gained 1.6 points in October, up from a flat reading of 0.0 points a month earlier.

The Federal Reserve said in its October policy statement that employment data would be an important factor in a rate decision, and the strong NFP reading on Friday has greatly increased the likelihood of a Fed hike. The US dollar posted broad gains as a result. 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)

• 11:00 NFIB Small Business Index. Estimate 96.4 points. Actual 96.1 points 
• 13:30 US Import Prices. Estimate -0.1%. Actual -0.5%
• 15:00 US Wholesale Inventories. Estimate 0.0%.
• 18:01 US 10-year Bond Auction
• 19:30 US FOMC Member Charles Evans Speaks

*Key releases are highlighted in bold

*All release times are GMT

WTI/USD for Tuesday, November 10, 2015

WTI/USD November 10 at 14:10 GMT

WTI/USD 43.98 H: 44.19 L: 43.83

XAU/USD Technical

• WTI/USD has shown little change during the day.
• 42.59 is providing support.
• 44.30 is a weak resistance line.

Further levels in both directions:

• Below: 42.59, 39.87 and 37.75
• Above: 44.30, 47.04, 49.06, and 53.86

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