WTI/USD – US Crude Dips as US Shale Production Increases

US crude has started the week with losses. In Monday’s North American session, US crude futures are trading at $52.70. Brent crude futures are trading at $55.21, as the Brent premium stands at $2.51. There are no US economic releases on the schedule.

Last week, the International Energy Agency predicted a “significant” boost to US output as a result of the OPEC agreement. With some 35 US rigs commencing operations last week, according to Baker Hughes, US oil production continues to climb. This rise in US production is apparent from recent releases of US Crude Inventories, which point to a large surplus in stockpiles. Last week, the indicator recorded a gain of 2.3 million barrels, after a surplus of 4.1 million barrels a week earlier. Both readings were much higher than expected. On Sunday, OPEC announced that 1.5 million barrels had been taken out of the market, out of 1.8 million agreed to under the recent production agreement between OPEC and other oil exporters. Still, if US production continues to rise and offsets the cutbacks announced by OPEC, oil prices could continue to head lower.

Donald Trump seems to be a magnet for controversy and the presidential inauguration was no exception. The inauguration on Friday proceeded without incident, but anti-Trump protesters responded with a massive protest on Saturday in Washington, much to the irritation of Trump. Although there is an unwritten rule that a new president is granted 100 days of grace, this may not prove to be the case this time around. The bruising election campaign is still fresh, Trump is in  combative mood and continues to snipe at the media, so chivalry and good will may be lacking. As we enter uncharted territory and begin the Trump era, how will the US dollar react? On Friday, Oanda’s Stephen Innes provided this assessment:

the downside risk for the USD remains elevated more so from Trump’s inauguration if he fails to underscore economic policy. On the other hand, if Donald comes out firing on all fiscal stimulus cylinders, bond yield will surge, and the greenback would catch an enormous updraft… the President–elect takes centre stage as we begin a new chapter in American politics and global financial markets. Buckle up; we are likely in for a wild ride in the coming 100 days [see the first link below for the full article]

We begin a new chapter for the US Dollar

Trumps Protection Bias Damages Dollar

WTI/USD Fundamentals

Monday (January 23)

• There are no US events on the schedule

WTI/USD for Monday, January 23, 2017

WTI/USD January 23 at 11:20 EST

Open: 53.31 High: 53.33 Low: 52.22 Close: 52.70

WTI USD Technical

• WTI/USD was flat in the Asian session. The pair posted losses in European trade but has partially recovered in the North American session
• 52.22 is providing support
• 58.32 is the next resistance line

Further levels in both directions:

• Below: 52.22, 46.54, 40.57 and 33.22
• Above: 58.32, 65.05 and 72.99

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