Crude Oil Inventories Are In, WTI On The Bull

This week’s crude oil inventories cycle has come and gone, bringing relatively few surprises to the markets. A mixed group of metrics was reported by the API and EIA statistics. The result has been October WTI crude oil futures running to the bull, establishing trade north of $69.00. The key psychological level of $70.00 appears to be the next big round number up for a firm test.

Crude Oil Inventories Are In…

Both the EIA and API stocks reports came in much improved over the previous release. Here is a quick look at the data:

Event                                                    Previous          Projected       Actual

API Crude Oil Stocks (Aug 24)            -5.170M                    NA             +0.038M

EIA Crude Oil Stocks (Aug 24)            -5.836M               -0.686M        -2.566M

All in all, the numbers are very positive in comparison to last week. The EIA report underperformed by nearly 2 million barrels but did cut last Wednesday’s deficit in half. Be on the lookout for supplies to consistently build after demand from the U.S. Labor Day holiday subsides.

WTI Crude Oil Technicals

In the first 30 minutes since the EIA release, October WTI futures traded in a whipsaw fashion. After an initial run to session highs at $69.55, price has fallen dramatically under the $69.00 level.

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

• Resistance(1): Psyche Level, $70.00
• Support(1): Bollinger MP, $67.26
• Support(2): Daily SMA, $66.53

Bottom Line: Right now, October WTI futures are trading in a relative no-man’s land. Price is well above support and below resistance on the daily time frame. While short scalps from beneath $70.00 and longs from downside support at $67.26 are good trades, they are unlikely to come into play today.

Of course, it is always better to be prepared for the unexpected. For the remainder of the session, I will be looking to scalp $69.92 to the short. Using a sub-1:1 risk vs reward scenario, this trade is worth 8-12 ticks with an initial stop at $70.01.