The weekly crude oil inventory cycle is complete and it is more of the same for WTI. Amid heavy volumes, price is trending to the bear for the second time this week. Tuesday’s positive close gave WTI bulls something to cheer about — that optimism has faded quickly.

Crude Oil Stocks

The markets were watching this week’s crude oil stocks reports with great interest. After last Friday’s jump in the Baker Hughes Rig Count, traders were anxious to see the hard data. Had North American producers filled the production void left by OPEC? Let’s find out:

• API crude oil stocks came in at -2.028 million barrels, up from the previous release of 1.001 million.
• EIA crude oil stocks came in at 2.072 million barrels, over the estimates of -1.824 million.

As was the case last week (and almost every week) the EIA numbers are being valued as the primary market driver of WTI. In the hour since the release, July WTI futures have fallen over $1.00. Traders recognize that there is a glut of available supply and are exiting longs in droves.

WTI Technicals

Earlier in the week, we talked about the potential for buyers to dig in just above the $64.00 level. On the EIA report, they have done precisely that.

Overview: This market is trending south. The macro 78% retracement at $64.19 is currently acting as resistance. In the event that it is taken out, be on the lookout for a precipitous drop to $61.73. WTI crude is currently in an intermediate-term free fall. It will be interesting to see what OPEC does ahead of the June 22 meeting to address the lag in pricing.

If we see more positive EIA crude oil stocks reports and North American producers operating at full capacity, the pre-Memorial day highs may be positioned as the upper extreme for 2018.