oil

Oil Inventories Are In, Bearish Conditions In WTI

Posted Wednesday, September 26, 2018 by
Shain Vernier • 2 min read

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.

November WTI Crude Oil Futures (CL), Daily Chart
November WTI Crude Oil Futures (CL), Daily Chart

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.

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About the author

Shain Vernier is our US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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