Inventories Are In, WTI Crude Oil Weekly Technicals

It has been a rough day for crude oil bulls. After a strong open above $69.00, sellers have stepped in and dominated the intraday action. Price has fallen more than $1.25 per barrel on heavy volumes. For now, traders are hesitant to hold longs even though inventories have come in beneath last week’s levels.

The Inventories Are In…

Earlier, the weekly crude oil inventory cycle was completed with the EIA stocks report. Here is a look at the hard data:

Event                                          Previous   Actual

API Crude Oil Stocks                    5.59M        -6.00M

EIA Crude Oil Stocks                   3.803M     -1.351M

The stockpiles of last week have given way to draws. The API number represents the largest swing, over an 11 million barrel discrepancy week-over-week. The EIA report also came in negative, but not nearly as extreme.

Major media outlets are reporting that a revival of Iranian sanctions has shaken the supply-side dynamic of the global oil markets. In my opinion, this week’s draws are on par with industry variance, not attributable to the situation in Iran.

WTI Crude Oil Weekly Technicals

Below is the weekly chart for September WTI crude oil futures before today’s session kicked off. It is useful for identifying the intermediate-term support and resistance levels.

After the rally of early July, WTI crude has settled into a rotational pattern. On the weekly time frame, here are the key levels to watch:

• Resistance(1): Yearly Triple-Top, $72.80-$72.98
• Support(1): 62% Macro Wave Retracement, $66.81
• Support(2): Weekly SMA, $66.04
• Support(3): Bollinger MP, $65.90

Overview: The zone between the 62% Macro Wave retracement ($66.81) and the Bollinger MP ($65.90) is a critical area for this market. At press time, September WTI is trading just north of the $67.50 handle. If we see bearish action as the week progresses, a long from support will come into play.