Crude Oil Inventories On Deck, $75.00 In View

WTI crude oil is continuing its early-week march north. At press time, price is rotating just above the $72.50 handle for July WTI futures. Volumes are heavy on the new front-month (July), with over 350,000 contracts changing hands. Are we in for $75.00 crude by Memorial Day?

In several live-market updates from March and April, I talked about the impact of seasonality on WTI crude pricing. Late May is a traditional driver of North American fuel demand, with Memorial Day weekend marking the beginning of the Summer travel season. Typically, we experience a bump in oil futures around this time of year.

Inventories

The weekly inventory cycle kicks off later today with the API crude oil stocks and concludes tomorrow morning with the EIA inventories number. Last week threw us a curveball with diverging reports. Let’s see if the pattern holds for this week:

• API stocks came at a positive 4.854 million barrels last week, well above expectations.
• EIA stocks are estimated at -2.827 million barrels, well below last week’s -1.404 million.

WTI Crude Technicals

Monday’s session showed heavy bullish participation in the July WTI crude contract. This market appears poised to grind higher. If inventories come in split as they did last week, we could be in for a chaotic few days on the energies markets.

Here are the numbers to watch as we roll into the inventory cycle:

• Resistance(1): Psyche Level, $75.00
• Support(1): Bollinger MP, $69.58
• Support(2): Daily SMA, $68.65

Overview: This week’s inventory cycle is going to bring a lot of action to the table. With shrinking supplies expected, I anticipate that negative reports have already been priced into the market. If a surplus comes to pass, then longer-term bearish sentiment may develop.

Oil players look to be eagerly awaiting the data, as only a 61 pip range daily range has been posted. I expect the action and range to open up considerably over the next 24 hours.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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