Crude Oil Steadies after Hitting 10-Week HighCrude oil is slightly lower on Monday, after gaining an impressive 6.7 percent last week. Investors are looking ahead to U.S. inflation and the Federal Reserve rate decision, either of which could affect the direction of crude prices.
U.S. indicators ended the week on a high note, with an excellent nonfarm payrolls report on Friday. The U.S. economy added an impressive 266 thousand jobs in November, crushing the estimate of 181 thousand. As well, the 3-month average payroll number increased from 189K to 205K. Recent nonfarm payrolls releases have been soft, due to the recent strike at General Motors. With all striking workers accounted for in the November report, the reading was significantly higher. Wage growth remained steady at 2.0%, but fell shy of the forecast of 0.3%. There was more positive news on the consumer front, as UoM Consumer Sentiment surged to 99.2 in December, up from 95.7 in November.
Aside from the sparkling nonfarm payrolls reports, OPEC announced that it will reduce production, effective January 1. The news sent crude oil higher on Friday, which showed gains of 1.42% on Friday. A reduction in output is aimed at curbing the worldwide glut of crude and stabilizing oil prices. At the same time, some OPEC members are notorious for failing to adhere to their production quotas, and if the new agreement is not honored, oil prices could head lower.
The line of 58.50 remains fluid and is currently a weak resistance line. Above, we find resistance at 59.25. On the downside, 57.50 is providing support. This is followed by the 200-EMA at 57.05 and the 50-EMA at 56.63. The next support level is at 56.50. With crude facing significant support barriers, the trend remains upward.