Crude Prices Stabilize After Another Rough Week

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Updated: Oct 8, 2019, 10:34 UTC

After back-to-back weeks in the red, crude has started the new trading week with gains. This week's key events include the Fed minutes and U.S. consumer inflation.

Crude Prices Stabilize After Another Rough Week

U.S. crude prices are higher in Monday trade. In the North American session, WTI is trading at $53.82, up $0.60, or 1.08%. Brent crude is trading at $59.26, up $0.73, or 1.33%.

Will Soft U.S. Data Push Drag Crude to $50?

Crude prices dropped sharply for a second straight week, and have fallen almost 10% since September 23. On Thursday, crude fell to $51.06, its lowest level since early August. U.S. numbers disappointed last week, weighing on crude prices. The ISM Manufacturing PMI contracted for a second straight month, while the Services PMI dropped sharply, as expansion in September was lower than expected. There was no relief from key employment numbers on Friday. Nonfarm payrolls came in at 136 thousand, shy of the forecast of 145 thousand. Wage growth fell to 0.0%, down from 0.4% a month earlier. The PMI and employment numbers are pointing to a slowdown in the U.S. economy, and less economic activity means reduced demand for oil.

Ahead – Fed minutes and CPI

Looking ahead at key events this week, the Federal Reserve will release the minutes of its September meeting. The Fed trimmed rates for a third time in four months. However, the markets remained steady despite the cut, as Fed Chair Jerome Powell reassured investors that the latest cut was intended as an insurance policy in case the U.S. economy weakened. If the minutes convey a hawkish message from policymakers, oil prices could respond with gains.

On Thursday, the U.S. releases CPI, the primary gauge of consumer spending. Inflation has been subdued in recent weeks, with three gains of 0.1% in the past four months. Another gain of 0.1% is expected in the upcoming release. With inflation levels well below the Federal Reserve target of 2.0%, there is no pressure on rate-setters to raise rates, and the Fed could lower rates again before the end of the year if a cut is warranted by economic conditions.

About the Author

Kenny Fisherauthor

Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.