US Crude has posted slight losses on Wednesday, as February futures are trading at $28.44 a barrel in the North American session. In economic news, CPI posted a weak reading of 0.1%, short of the estimate of 0.0%. Building Permits dipped in December, but managed to beat expectations. The US will release two key events on Thursday, as Unemployment Claims and the Philly Fed Manufacturing Index.
Weak US inflation indicators remain a concern for Federal Reserve policymakers, who must decide whether another rate hike would be appropriate in early 2016. This was underscored on Wednesday, as key inflation numbers missed their estimates. CPI dropped 0.1%, short of the estimate of 0.0%. Core CPI also softened, posting a gain of 0.1%. This was short of the forecast of 0.2%. Will these weak numbers dampen Fed enthusiasm for a rate hike? There is speculation that the Fed could make a move in March, contingent on the US economy continuing to show strong numbers. At the same time, minutes from the Federal Reserve Policy meeting in December indicated that some policymakers are concerned that the inflation picture may not improve anytime soon, and it would be premature to raise rates again before inflation levels improve.
Is crude oil in free-fall? January has been disastrous for crude oil prices, which have plunged a remarkable 23% and is languishing at levels not seen since February 2004. There don’t appear to be any lifelines on deck for the plummeting commodity. On Tuesday, the well-respected International Energy Agency stated that oil prices could continue to slide. In a development which could exacerbate the global oil slump, Iran has been given the green light to resume oil exports. Western nations, led by the US, have officially lifted sanctions on Iran, after the International Atomic Energy Agency announced that Iran had fully complied with its obligations under the nuclear agreement. Iran is expected to immediately begin exporting up to 600,000 barrels/day, adding to the huge glut of oil on global markets. Meanwhile, OPEC said that it had pumped less oil in December, but this is unlikely to increase oil prices, as Iran becomes the latest supplier in an overly crowded market.
WTI/USD Fundamentals
Wednesday (Jan. 20)
- 8:30 US Building Permits. Estimate 1.20M. Actual 1.23M
- 8:30 US CPI. Estimate 0.0%. Actual -0.1%
- 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
- 8:30 US Housing Starts. Estimate 1.19M. Actual 1.15M
- 10:30 US Crude Oil Inventories. Estimate 3.3M
Thursday (Jan. 21)
- 8:30 US Philly Fed Manufacturing Index. Estimate -3.1 points
- 8:30 US Unemployment Claims. Estimate 281K
*Key releases are highlighted in bold
*All release times are EST
WTI/USD for Wednesday, January 20, 2016
WTI/USD January 20 at 10:35 GMT
Open: 29.57 Low: 28.36 High: 29.57 Close: 28.44
WTI/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 20.00 | 22.28 | 26.64 | 30.00 | 32.22 | 35.09 |
- WTI/USD posted losses in the Asian session and leveled off in European trade. The pair has resumed moving lower in North American trade.
- The round number of 30.00 is the next resistance line
- 26.64 is providing support
Further levels in both directions:
- Below: 26.64, 22.88 and 20.00
- Above: 30.00, 32.22 and 35.09
