WTI Crude continues to move upwards, as crude futures trade at $38.05 per barrel in Thursday’s North American session. In the US, Unemployment Claims edged down to 267 thousand, beating the estimate of 270 thousand.
Oil prices have moved higher on Thursday, climbing to the $38 level. Oil received a boost a day earlier as the weekly Crude Oil Inventories report showed a surprising drop of 5. 9 million barrels, compared to the forecast of a surplus of 1.4 million. Still, oil has nosedived since the start of November, when a barrel cost over $45, battered by a huge global glut of oil. The low prices could continue well into 2016, although if geopolitical crises arise which threaten the supplies, oil prices could rebound in a hurry. With OPEC in disarray and Iran biting at the chomp to sell its oil after years of international sanctions, there isn’t much to attract investors to oil, and some analysts as predicting that oil could slip below the $30 level next year.
There were a host of US releases on Wednesday, with mixed results. Durable Goods reports were unimpressive, underscoring weakness in the US manufacturing sector. Core Durable Goods slipped by 0.1%, short of the forecast of a 0.1% gain. Durable Goods came in at 0.0%, but this beat the estimate of -0.6%. Housing numbers also disappointed, as New Home Sales dipped to 490 thousand, well off the estimate of 507 thousand. This reading comes on the heels of Existing Home Sales, which posted a weak reading of 4.76 million, its worst performance since April 2014. There was some good news from consumer indicators, as the UoM Consumer Sentiment improved to 92.6 points, above the forecast of 92.1 points and marking a 4-month high.
In one of the most important economic events in 2015, the US Federal Reserve raised interest rates by 0.25 percent, the first rate hike since June 2006. The Fed got the rate ball rolling back in October, when it surprised the markets when it released a statement that it was seriously considering raising rates. Predictably, this caused a buzz in the markets about the Fed’s plans, as speculation earlier in the year about a rate hike failed to materialize. To the credit of Fed chief Janet Yellen and her colleagues, the Fed put into place a carefully-crafted strategy, sending a steady of stream of signals that it was intending to tighten monetary policy, if economic conditions remained positive. This gave the markets ample time to price in a rate hike, and currency market volatility was not excessive after the US rate hike, the first in almost 10 years. Although a hike of 0.25 percent is expected to have limited economic impact, the Fed move has given the US economy a critical vote of confidence, and this will be duly noted by the global markets. As well, this move is expected to be the first in a series of incremental rate hikes over the course of 2016, and higher interest rates means that the US dollar will become even more attractive to investors, at the expense of other currencies, such as the euro.. As well, this move is expected to be the first in a series of incremental rate hikes over the course of 2016, and higher interest rates means that the US dollar will become even more attractive to investors.
WTI/USD Fundamentals
Thursday (Dec. 24)
- 13:30 US Unemployment Claims. Estimate 270K
- 15:30 US Natural Gas Storage. Estimate -26B. Actual -32B
*Key releases are highlighted in bold
*All release times are GMT
WTI/USD for Thursday, December 24, 2015
WTI/USD December 24 at 19:00 GMT
WTI/USD 38.09 H: 37.94 L: 38.09
WTI/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 32.22 | 35.09 | 37.75 | 39.87 | 42.59 | 47.05 |
- Crude was flat in the Asian session and posted small gains in the European and North American sessions.
- 37.75 remains busy and has switched to a support role
- 39.87 is an immediate resistance line
Further levels in both directions:
- Below: 37.75, 35.09, 32.22 and 30.00
- Above: 39.87, 42.59 and 47.05
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