WTI Crude

Crude Oil Inventories Are In: Bullish Break In WTI

Posted Wednesday, June 13, 2018 by
Shain Vernier

Another week, another surprise WTI crude oil inventory cycle. With so many factors influencing the supply and demand of oil, accurately predicting supply levels is a monumental task. This week’s numbers came in well off of expectations and have brought significant action to WTI markets.

Crude Oil Inventories Reports

The hard supply data is in and has brought more uncertainty to global crude traders and investors. Below is a quick look at this week’s reports:

Event                                                   Actual     Projected   Previous

API Crude Oil Stocks Report               0.833M             NA        -2.028M

EIA Crude Oil Stocks Report               -4.143M      -2.744M     2.072M

Yet again, the API and EIA reports have come in mixed. The EIA statistic has been the primary catalyst driving participation in July WTI futures. The -4.143 million barrels represents a 6.2 million barrel swing from last week.

Supplies have dropped dramatically, likely due to the North American travel season spiking demand for refined gasoline and diesel products. With the June 22 OPEC meeting rapidly approaching, supply numbers for the coming week will draw even more attention.

July WTI Futures

On the daily time frame, price in July WTI futures has broken above a key technical level. On the EIA report hitting the newswires, price ran to the bull, eventually testing the $67.00 handle.

July WTI Crude Oil Futures (CL), Daily Chart
July WTI Crude Oil Futures (CL), Daily Chart

Here are the levels to watch for the remainder of the session:

  • Resistance(1): Bollinger MP, $67.28
  • Support(1): 38% Fibonacci Retracement of Current Wave, $65.92

Bottom Line: At press time, price is in a definitive uptrend on intraday timeframes. A test of topside resistance near the $67.25 area is a possibility.

For the remainder of the session, I will be scalping the Bollinger MP to the short. Sells from $67.24 with an initial stop at $67.36 is an affordable way to play a rejection of resistance. Given a sub-1:1 risk vs reward plan, this trade yields between 8-12 ticks.

In the event price reaches the $67.25 handle, the intraday uptrend is likely to be strong. The goal of the scalp is immediate and positive price action. If price fails to retrace upon entry, then do not hesitate to make a hasty exit.

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About the author

Shain Vernier is our 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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