The weekly oil inventory cycle is complete and WTI crude is on the bull. Prices for November WTI futures are up more than $0.75 on the EIA reporting a draw on supply. Disruptions to Iranian production stemming from U.S. sanctions are being given credit for the discrepancy. The result has been a solid rally and potential challenge to a daily Double-Top formation.

Inventories Are In…

A short while ago, the EIA oil stocks report was released rounding out this week’s inventory cycle. Here is a look at the hard data:

Event                                          Actual       Projections       Previous

API Crude Oil Stocks                  1.250M                 NA                -8.636M

EIA Crude Oil Stocks                 -2.057M            -2.741M           -5.296M

The API and EIA numbers came in mixed, but both outperformed last week’s dismal numbers. While by no means overwhelmingly positive, supply has rebounded millions of barrels from the releases of last Tuesday/Wednesday.

November WTI Futures

Since a short-lived test of support yesterday, WTI crude pricing has rallied more than $2.00. At press time, November WTI futures appear poised to test the daily Double-Top formation at $70.89-$70.98.

Here are the key levels to watch for the rest of the trading day:

• Resistance(1): Double-Top Formation, $70.89-$70.98
• Support(1): Daily SMA, $68.46

Bottom Line: Until elected, I will have sell orders queued up at the Double-Top pattern from $70.89. Using an ultra-tight 1:1 risk vs reward ratio and an initial stop at $71.01, this trade produces 12 ticks.

The above recommendation will likely be an intraday counter-trend play. This means it is inherently risky. Be sure to use moderate leverage and have your stops down ahead of the trade going live.