Oil Inventories Are In, Bearish Conditions In WTI

The weekly oil inventories cycle is complete and WTI crude is trading with a moderately bearish tone. At press time, November WTI futures are off a little more than $0.25 per barrel. Participation has been modest in anticipation of the upcoming FED announcements.

Oil Inventories Are In…

This week’s inventory cycle brought a couple of surprises to analysts. However, the numbers are more in line with the traditional concept of seasonality and building supply going into the fall/winter months. Here is a quick look at the data:

• Tuesday afternoon’s API Crude Oil Stocks report came in at a positive 2.903 million barrels. This figure is up from last week’s number of 1.205 million.
• This morning’s EIA Crude Oil Stocks report came in at a positive 1.852 million barrels. Last week’s number was -2.057 million, almost four million below today’s release.

The result has been tight trading on the WTI market. Prices are off modestly but may pose a reversal as the FED takes center stage. Nonetheless, the build in supply was a bit unexpected — it is very possible that these reports will prompt a late-week return to $70.00 for WTI.

November WTI Crude Oil Futures

The 38% Current Wave Retracement ($71.71) is putting up a nice fight as downside support on the daily time frame. If this level gives way, we may be in for a bearish breakout in the wake of positive inventories.

Overview: Aside from the Psyche Level ($73.00) and the 38% Current Wave Retracement ($71.71), there isn’t a whole lot on the technical docket facing today’s trade of WTI futures.

Without a doubt, this is a difficult day to trade crude oil. With the EIA report and coming FED announcements, getting a true read on price action is going to be difficult. It may be better to let the dust clear a bit before assuming risk in this market.