U.S. Crude Dips, Jobless Claims Beats Estimate

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Includes: UDN, USO, UUP
by: Dean Popplewell

By Kenny Fisher

US crude has posted losses on Thursday, erasing the gains from the Wednesday session. West Texas Intermediate Crude is trading at $50.53 in the North American session. Brent crude is trading at $51.82, for a premium of $1.29. There was positive news on the employment front, as Unemployment Claims dipped to 264 thousand, beating expectations. On Friday, the US will release UoM Consumer Sentiment, with the indicator expected to dip to 94.1 points.

Last week’s Nonfarm Payrolls of just 38,000 new jobs shocked the markets and sent the US dollar tumbling. A couple of minor employment indicators were soft, leading to some concern about the strength of the US labor market. However, these concerns should be laid to rest after key job numbers this week were solid and beat expectations. On Wednesday, JOLTS Job Openings improved to 5.79 million, easily beating the forecast of 5.67 million. Unemployment Claims followed suit with a strong reading. The indicator dropped to 264 thousand, compared to an estimate of 269 thousand. Significantly, this marked the lowest jobless report in six weeks. With the Federal Reserve mulling over a rate hike in the next few months, employment numbers will be especially significant, and any unexpected reading could result in volatility in the currency markets.

US crude prices have been steadily rising, as the commodity is up 47% since the end of February, when it was trading at $33 a barrel. Crude pushed above the $51 level on Wednesday, its highest level since early July 2015. Crude Oil Inventories, which measures US crude stockpiles, posted a sharp drop of 3.2 million last week. This marked the fourth decline in the past five readings, and lower supplies have stabilized the price of US crude in recent weeks. Brent prices have also remained strong, as Chinese oil imports have increased and production in Nigeria has been disrupted due to attacks by militants.

WTI/USD Fundamentals

Thursday (June 9)

  • 8:30 US Unemployment Claims. Estimate 269K. Actual 264K
  • 10:00 US Wholesale Inventories. Estimate 0.1%. Actual 0.6%
  • 10:30 US Natural Gas Storage. Estimate 80B. Actual 65B
  • 13:01 US 30-year Bond Auction

*Key events are in bold

*All release times are EDT

WTI/USD for Thursday, June 9, 2016

WTI/USD June 9 at 12:50 EDT

Open: 51.60 Low: 50.22 High: 51.64 Close: 50.53

WTI/USD Technical

S3 S2 S1 R1 R2 R3
43.45 46.69 50.13 53.50 56.79 60.68
Click to enlarge
  • WTI/USD was flat in the Asian session. The pair posted losses in the European session and has leveled in North American trade
  • 50.13 is a weak support line. It could see action during the North American session
  • There is resistance at 53.50

Further levels in both directions:

  • Below: 50.13, 46.69 and 43.45
  • Above: 53.50, 56.79 and 60.68

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.