WTI/USD – Crude Touches 7-Month Highs, US Housing Report Shines

US crude is showing little movement on a data-light Friday, trading at $48.96 in the North American session. Brent crude is trading a drop lower, at $48.74. The trading week is ending on a quiet note, as there is just one event on the schedule. Existing Home Sales continued to improve, coming in at 5.45 million. This figure beat the estimate of 5.40 million.

Crude prices remain steady, as the commodity touched a high of $49.20 on Friday, its highest level since October 2015. Crude Oil Inventories, a weekly release, have posted declines only twice since February, as US crude stockpiles remain at high levels. Nevertheless, oil prices have remained climbed in recent weeks, in large part a result of production problems such as the massive wildfire in Alberta and disruptions in Libya and Nigeria. As well, the US economy appears to have recovered from a weak first quarter, thus increasing demand for oil and boosting crude prices.

The highly-anticipated Federal Reserve minutes were more hawkish than expected, resulting in strong volatility in the global currency markets. The US dollar posted strong gains against most of the major currencies and also appreciated against oil.  The minutes indicated that a June rate hike remains firmly on the table, and the currency markets have reacted with strong volatility. According to the minutes, the Fed wants to see stronger growth in the second quarter as well as better numbers from the inflation and employment fronts. If this is achieved, the Fed said it “likely would be appropriate” to raise rates at the June meeting. This message is somewhat hawkish in comparison to recent statements by Fed chair Janet Yellen, which were more cautious about the strength of the US economy. The markets were skeptical that June would be a “live meeting”, with most analysts assuming that the Fed would continue to sit on the sidelines. The minutes have drastically changed market sentiment, however, since it’s clear that the June meeting will be a crucial one, as it could mark the Fed’s first interest rate hike this year. With the Fed saying that a key factor in a rate hike decision will be the strength of the US economy, upcoming major economic indicators will be under the market microscope, particularly inflation and employment numbers.

WTI/USD Fundamentals

Friday (May 20)

• 10:00 US Existing Home Sales. Estimate 5.40M. Actual 5.45M

*Key events are in bold

*All release times are EDT

WTI/USD for Friday, May 20, 2016

WTI/USD May 20 at 9:45 EDT

Open: 48.82 Low: 48.39 High: 49.28 Close: 48.61

WTI/USD Technical

• WTI/USD has shown limited movement in the Friday session
• There is resistance at 50.13
• 46.69 is providing support

Further levels in both directions:

• Below: 46.69, 43.45, 40.00 and 37.75
• Above: 50.13, 53.50 and 56.79

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