EIA Reports A Major Draw On Crude Oil Supplies
The weekly crude oil inventory cycle is complete and it was not pretty. Both the API and EIA stocks reports came in extremely negative, showing large draws on supply. Nonetheless, August WTI crude oil futures are down for the session, trading beneath the $73.00 handle.
Predicting price action immediately following an EIA release is tricky — it seems that the inventories statistics often go ignored until later in the week.
EIA Crude Oil Stocks
Following yesterday’s API report, the EIA released their inventory statistics to the public earlier today. For the past several months, these numbers have varied greatly from industry projections. This week has certainly stuck to that trend:
- The API Crude Oil Stocks report came in at -6.796 million barrels, down from last week’s -4.500 million.
- The EIA Crude Oil Stocks report came in at a staggering -12.633 million barrels for the week. This number shattered industry projections of -4.489 million and last week’s surplus of 1.245 million.
If there has been such a large one week draw on supply, then why are WTI prices heading south? The big reason is news out of Saudi Arabia. Production for June spiked significantly, upwards of 500,000 barrels per day. Traders have latched on to this piece of news, predicting a glut of oil to hit the market in coming months.
One thing is for sure — today’s EIA draw was the largest since 2016. If WTI continues to sell-off toward the weekend, the top for 2018 may be in.
WTI Crude Oil Technicals
After a post-EIA whipsaw period, August WTI crude futures have broken to the bear. Price is trending down, beneath $73.00. Can this market test support on the daily time frame?
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Here are the key support and resistance levels to watch for the rest of the day:
- Resistance(1): Psyche Level, $75.00
- Support(1): Bollinger MP, $70.89
- Support(2): 38% Retracement, $70.77
Bottom Line: The EIA Crude Oil Stocks report should have brought an immediate test of $75.00. This did not occur. As of now, WTI long-term bulls are well advised to proceed with caution.
For the rest of the week, buys from above support will be a solid entry with the daily uptrend. Longs from $70.91 with an initial stop at $70.44 are a good way to play rotation back toward the $73.00 value area. Using a standard 1:1 risk vs reward management plan, this trade yields 47 ticks.
Be sure to check out the Comments section below for updates on the fast-moving crude oil market as it develops.
Top 4 Brokers
WTI crude oil is trending lower, testing the $72.00 handle. This market is in a freefall and we may be in for a test of our support level by day’s end. Stay tuned…
August WTI continues to crash, pushing session lows at $71.50. The $70.91 buy may come into play late in the day.
The long position is live. The intraday trend is strong, but a late-day buyback may produce the profits.
Bearish trend is especially strong. A test of $70.00 looks to be the order of the day here. Long position is in deep trouble, likely to be stopped after only a 13 tick positive move.
Stopped out, fresh intraday lows at $70.00. An epic $4 selloff in the midst of a massive draw on supply. This trade was brutal, but a great example of how stops save money. In this case, another 40+ pips draw. It appears buyers are putting their heels on $70.00. Today’s close will be fascinating.