US Crude Steady at $45, Manufacturing PMI Dips

US crude futures are showing little movement on Monday, continuing the lack of activity which marked the Friday session. US Crude is trading at $45.26 in the North American session. Brent crude is trading at $46.38, as the Brent premium stands at $1.12. On the release front, it’s a quiet start to the new trading week. The key event of the day, ISM Manufacturing PMI, posted a weak reading of 50.8 points, below the estimate.

ISM Manufacturing PMI, a key gauge of manufacturing output, missed expectations. The index dipped to 50.8 points, shy of the estimate of 51.6 points. This reading just above the 50-point line points to near stagnation in the manufacturing sector. Last week, Core Durable Goods dropped 0.2%, well off the estimate of a 0.6% gain. This marked the fourth decline in five months. Durable Goods Orders was stronger at 0.8%, but also missed expectations, as the estimate stood at 1.9%. Also on Monday, Final Manufacturing PMI and Construction Prices missed expectations, but ISM Manufacturing Prices easily beat the estimate. Manufacturing remains a sore spot, as the sector continues to lag behind the economy’s generally solid performance, as the global demand for US products has taken its toll.

The first quarter of 2016 has been marked by shaky global markets and a sharp drop in oil prices, so slower growth for the US economy was not unexpected. GDP climbed 0.5% in the first quarter, shy of the estimate of 0.7%. This was considerably lower than the 1.4% gain in the fourth quarter of 2015, and marked the weakest quarter of growth in two years. Although economic growth remains moderate, the lukewarm reading will not help the case of Fed policymakers who favor a rate hike, especially with inflation at low levels. The markets, which were not expecting an April hike, are keeping a close eye on key US economic numbers, looking for clues as to whether the Fed will make a move at its June policy meeting. The April policy statement sounded cautiously optimistic about the US economy, but did not provide any clues about a hike in June.

WTI/USD Fundamentals

Monday (May 2)

• 9:45 US Final Manufacturing PMI. Estimate 51.0. Actual 50.8
• 10:00 ISM Manufacturing PMI. Estimate 51.6 points. Actual 50.8
• 10:00 US Construction Spending. Estimate 0.5%. Actual 0.3%
• 10:00 ISM Manufacturing Prices. Estimate 51.0. Actual 59.0
• Tentative – US Loan Officer Survey

*Key events are in bold

*All release times are EDT

WTI/USD for Monday, May 2, 2016

WTI/USD May 2 at 11:00 EDT

Open: 45.65 Low: 45.02 High: 46.13 Close: 45.26

WTI/USD Technical

• WTI/USD showed limited movement in the Asian and European sessions. The pair has posted slight losses in North American trade
• 43.45 is providing support
• There is resistance at 46.69

Further levels in both directions:

• Below: 43.45, 40.00, 37.75 and 35.09
• Above: 46.69, 50.13 and 51.59

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.