Crude Prices Climb to 5-Week High

Crude oil continues to post gains on Monday, after sharp gains on Friday. In the European session, U.S. West Texas Intermediate crude oil futures are trading at $56.82, up $0.68 or 1.20% on the day. Brent crude oil futures are trading at $62.48 up $0.83 or 1.35%.

Crude Jumps as NFP Beats Estimate

Crude oil posted sharp gains on Friday, climbing 3.8%. Investors were pleased with the U.S. nonfarm payrolls report, as the gain of 128 thousand easily beat the estimate of 90 thousand. The exceptionally low forecast was due to a strike by GM workers, which ended last week. The strike cost GM some $2 billion in lost production, while workers lost $1 billion in lost wages. Analysts had expected the strike to take a toll on third-quarter growth, as the forecast stood at 1.6%. However, economic growth was stronger than expected, with a gain of 1.9%.

Ahead – U.S. Services PMI, Crude Inventories

The U.S. services sector continues to outperform the manufacturing industry. The latter has been in contraction mode, with two straight readings above the 50-level. The services PMI has not fallen into contraction territory since 2009. The October release, which will be published on Tuesday, is expected to accelerate to 53.6 points. This will be followed by the crude inventories report, which continues to have a significant impact on crude prices. Last week’s report showed a large surplus of 5.7 million, which pushed oil prices lower.

Crude Technical Analysis

Crude has changed directions and posted gains of 5.0% since Thursday. I continue to monitor the 50-EMA, which is at 55.28. Crude broke this line on Wednesday and again on Friday – currently, it is providing the pair with support, which is indicative of an uptrend. On the upside, there is resistance at the 58.00 level.