• The price of WTI climbed to a new 2 year high yesterday and during today’s Asian morning after an unexpected US oil production drop. Specifically media reported that last week’s US oil production was reduced by about 35M barrels tightening the oil market. As a further effect, yesterday’s Crude Oil inventories data release, showed a drawdown of 4.6M barrels which was quite higher than the anticipated drawdown of 3.97M barrels and hence tightened even further the oil market. It should be noted that the new Crude Oil inventories level of 431.9M barrels is significantly lower than last years 486M level in the same period. Concerns seemed to grow as the extreme cold surrounding the US currently, could increase demand even further. On other news headlines yesterday, media reported that the recent explosion at a Libyan pipeline may not affect the country’s current oil exports, in such an extend as initially reported, easing the overall oil market a bit.

• As previously mentioned WTI prices rose yesterday marking a new two year high by breaking the 60.00 $ (S1) resistance line (now turned to support). We expect for the short-term WTI prices to move in a sideways manner with a possible increase in demand supporting somewhat WTI prices. Should the price of WTI continue to remain under buying interest it could break the 61(R1) resistance level and aim for the 62 (R2) resistance hurdle. Should it come under selling interest, the commodity’s price could break the support line of 60$ (S1) and aim for the 58.35 (S2) support zone.

CAD strengthens as oil prices increase

• As a commodity currency, the CAD continued to strengthen after the recent increases in oil prices. The looney could be further supported as increased demand may arise due to the current weather conditions in the US. However it should be mentioned that the currency was supported throughout the past two weeks also by good financial data releases from Canada. The Canadian dollar could remain on the headlines in the upcoming weeks as more financial data is due and the winter weather conditions could support oil prices even further.

• USD/CAD continued to drop throughout last week marking a downward trend line and heading towards the 1.2520 (S1) support line. We expect the market to remain in a bearish mood for the short term and should that be the case we could see the pair breaking the 1.2520(S1) support line and aim for the 1.2450 (S2) support level. Should the second support level be breached we could see the pair aiming for the 1.2350 (S3) level. On the other hand should the bulls take the driver’s seat we could see the pair testing the 1.2650 (R1) resistance level.

• As for today’s other economic data, the preliminary HICP rate for Germany is to be released and is expected to slow down somewhat. As the figure is preliminary and the political news regarding the EUR seem to be of neutral to negative tone the market could move somewhat.

USD/CAD

• Support: 1.2520(S1), 1.2450 (S2), 1.2350 (S3)

• Resistance: 1.2650 (R1), 1.2710 (R2), 1.2910 (R3)

WTI

• Support: 60.00(S1), 58.35 (S2), 57.75 (S3)

• Resistance: 61.00(R1), 62.00(R2), 63.00(R3)