WTI/USD – Crude Hugs $50 Level, US Jobless Claims Slides

US crude prices have ticked higher in the Thursday session, as crude sticks close to the symbolic level of $50. In North American trade, WTI/USD futures are trading at $50.50. Brent crude futures are steady at $53.47, as the Brent premium stands at $2.97. On the release front,unemployment claims dipped to 258 thousand, matching the forecast. This was a strong improvement from the previous reading in 268 thousand. On Friday, the US releases UoM Consumer Sentiment Index. The markets are expecting the indicator to continue to improve in December, with an estimate of 94.3 points.

US crude inventories posted a second straight decline last week. The indicator declined by 2.4 million, a much sharper drop than the forecast of 1.4 million. It marked the sharpest decline in stockpiles since mid-October. Oil prices have surged since OPEC reached a production cut agreement last week, but members will have to honor their quotas in order for the deal to stabilize oil prices. OPEC members have set record productions levels in recent months, and non-OPEC members such as Russia have also been producing at very high levels. This means that even with the OPEC agreement, the worldwide glut of oil will remain for some to come. OPEC and non-OPEC countries will meet on Saturday, but it’s unclear if non-OPEC nations will agree to a production cut agreement.

The Federal Reserve meets next week for its monthly policy meeting, the first after Donald Trump’s election as president. The markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and market anticipation of a hike has translated into strong gains for the greenback. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has stated that he plans to increase government spending and cut taxes, which could lead to higher inflation levels. The Fed has indicated that it plans to raise rates gradually in 2017, but this could change once the new administration’s economic policies become clearer.

OPEC Output Set Record High Ahead of Cut

Non-OPEC Producers Might not Be as Motivated to Join Cut

WTI/USD Fundamentals

Thursday (December 8)

• 13:30 US Unemployment Claims. Estimate 258K. Actual 258K
• 15:30 US Natural Gas Storage. Estimate -44B

Friday (December 9)

• 15:00 US Preliminary UoM Consumer Sentiment. Estimate 94.3

*All release times are EST

*Key events are in bold

WTI/USD for Thursday, December 8, 2016

WTI/USD December 8 at 11:35 EST

Open: 50.03 High: 50.75 Low: 49.62 Close: 50.50

WTI USD Technical

• WTI/USD was flat in the Asian session. The pair posted small gains in European trade.  In the North American session, the pair continued to post gains but has retracted
• 46.54 is providing support
• 52.22 is a weak resistance line

Further levels in both directions:

• Below: 46.54, 40.57, 33.22 and 26.06
• Above: 52.22, 58.32 and 65.05

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