WTI Trades Beneath $70.00 Following EIA Inventories
Shain Vernier • 2 min read
The weekly crude oil inventories cycle is complete and November WTI futures are on the bear. Prices have fallen out of bed, prompting a test of the $70.00 level. Rollover is diluting volumes between the November and December contracts. At press time, traders prefer the November contract 3/2 over December. Rollover to the December contract should be completed by Friday.
The inventories statistics are in and it appears that seasonality is beginning to figure into the equation ― at least for the EIA report. For the week, statistics came in mixed:
Event Previous Projected Actual
API Crude Oil Stocks 9.75M NA -2.10M
EIA Crude Oil Stocks 5.987M -0.281M 6.490M
While the API report came in well below last week’s figure, the EIA statistics showed a strong build in supply. Remember that the EIA report receives more attention than the API and acts as a primary market driver for WTI. Today’s numbers sent sellers to their screens in mass.
WTI Crude Oil Technicals
After failing to gain steam above the daily 38% Current Wave Retracement ($72.33, not pictured), November WTI futures have posted a trend day down.
Overview: For the moment, it appears that the media buzz over journalist Jamal Khashoggi’s disappearance has died down a bit. Calls for the U.S. to sanction Saudi Arabia are coming from Congress, but will likely be distant memories by this time next week.
The 5000-pound elephant in the room is the $70.00 level. On the EIA release, traders sent November WTI plummeting, posting a session low of $69.63. Price quickly rebounded north of $70.00.
The $70.00 area has the potential to stimulate heavy two-way action and prolonged consolidation. Of course, we will be looking at the December WTI contract very soon. At press time, December WTI is trading in the neighborhood of $70.00. The November/December spread is a meager 6 cents. As far as contract spreads go, this is a tight one!