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EIA reports

EIA Crude Oil Inventories Come In Positive

Posted Thursday, July 5, 2018 by
Shain Vernier • 2 min read

A bit earlier in the session, the EIA crude oil stocks report was released to the public. The data sent August WTI plunging, rapidly sliding over $1.00. Since then, volatility has calmed and price has posted a nice rebound.

EIA Crude Oil Inventories Report

Another week, another surprise inventory cycle. It is becoming old hat, but industry estimates facing crude oil are rarely on the money. Here is a synopsis of this week’s numbers:

  • API crude oil stocks came in at -4.500 million barrels, an improvement over the previous release of -9.228 million.
  • EIA crude oil inventories were reported as a surplus of 1.245 million barrels. This number is well above the projected -3.538 million.

With many traders expecting further draws on supply to become the norm, both numbers showed a vast improvement over last week’s releases. The EIA statistic is the real showstopper — a 1.245 million barrel surplus? That represents a massive 12 million barrel swing over last week’s report.

Over the July 4th holiday, President Trump lit up Twitter demanding OPEC reduce their oil prices immediately. I expect to see more of this type of rhetoric as we move forward. If oil prices do not subside by early Fall, announcements regarding new domestic energy projects and the restructuring of the U.S./OPEC relationship is very likely.

WTI Crude Oil Technicals

The surprise EIA report brought about a rapid plunge beneath Wednesday’s low.

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

Bottom Line: The trend in August WTI crude is definitively bullish. Price has not posted a retracement worthy of note since the uptrend of June began. Until we see a solid pullback, one has to maintain a bullish bias.

For the rest of the week, I will have buy orders queued up from $70.81. Using an initial stop at $70.49, this trade produces 32 ticks using a 1:1 risk vs reward management plan.

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