US Crude Flat, US Manufacturing PMI Meets Expectations

US crude futures are steady on Tuesday, trading at $33.69 a barrel in the North American session. Brent crude futures are trading at $36.47. On the economic front, ISM Manufacturing PMI came in at 49.5 points, within expectations. On Wednesday, the US releases ADP Non-Farm Employment Change, ahead of Nonfarm Payrolls on Friday.

January reports from the US housing sector are raising concerns. Housing Starts and Building Applications fell in January, and New Home Sales and Pending Sales followed suit, missing expectations. Activity in the housing sector is closely monitored by analysts, as a decrease in home building can have a negative impact on other sectors of the economy. The markets will next shift focus to the employment front, starting with the ADP Nonfarm Payrolls. The estimate stands at 185 thousand, much lower than the previous release of 205 thousand.

The US economy has been grappling with a downturn in global demand, which has taken its toll on the manufacturing sector. A strong US dollar, which has posted broad gains in recent months, has only exacerbated the situation. However, recent manufacturing releases are raising hopes that the sector is stabilizing. ISM Manufacturing PMI improved to 49. 5 points, a slight contraction, but above the estimate of 48.5 points. Late last week, durable goods reports were much stronger than expected. Core Durable Goods rose 1.8%, crushing the estimate of 0.2%. This marked the key indicator’s strongest showing since March 2014. Durable Goods Orders followed suit with a sharp rise of 4.9%, rebounding from the previous reading of -5.1%. This was stronger than the estimate of 3.0%.

WTI/USD Fundamentals

Tuesday (March 1)

• 9:45 US Final Manufacturing PMI. Estimate 51.0 points. Actual 51.3 points
• 10:00 US ISM Manufacturing PMI. Estimate 48.5 points. Actual 49.5 points
• 10:00 US Construction Spending. Estimate 0.5%. Actual 1.5%
• 10:00 US ISM Manufacturing Prices. Estimate 35.5 points. Actual 38.5 points
• 10:00 US IBD/TIPP Economic Optimism. Actual 46.8 points
• All Day – US Total Vehicles. Estimate 17.6M

Upcoming Key Events

Wednesday (March 2)

• 8:15 US ADP Non-Farm Employment Change. Estimate 185K

*Key events are in bold

*All release times are EST

WTI/USD for Tuesday, March 1, 2016

WTI/USD February 29 at 11:30 EST

Open: 33.78 Low: 33.37 High: 34.51 Close: 33.69

WTI/USD Technical

• WTI/USD showed gains in the Asian and European sessions but was unable to consolidate these gains. The pair has continued its downward movement in North American trade.
• There is resistance at 35.09
• 32.22 is providing support

Further levels in both directions:

• Below: 32.22, 30.00, 26.64 and 22.88
• Above: 35.09, 37.75 and 40.00

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