rig count

WTI Crude Tests $55.00, Inventories On Deck

Posted Wednesday, November 14, 2018 by
Shain Vernier • 1 min read

The weakness in the WTI crude oil market is quickly becoming the lead financial story of 2018. Currently, WTI is in the midst of its worst losing streak in modern history, posting 12 straight negative sessions. For the moment, prices are rallying to the bull and a green candlestick is finally setting up on the daily chart.

The Inventories Are Coming Up…

In observance of Veteran’s Day, the weekly crude oil inventory cycle has been delayed by one session. Later this afternoon, the API oil stocks report will be released to the public, followed by tomorrow’s EIA figure. Here is a quick look at this week’s expectations:

Event                                     Previous     Projected

API Crude Oil Stocks                7.83M              NA

EIA Crude Oil Stocks                5.78M            3.01M

The markets are expecting a further build in supply, extending the recent trend in this area. In the event that we see surprise draw, look for December WTI crude to revisit the $60.00 level.

December WTI Crude Oil Futures

At press time, December WTI crude is up in the neighborhood of $2 per barrel. Bids have hit this market throughout the session, with buyers defending the $55.00 handle with vigor.

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

Bottom Line: As long as the swing low of $54.75 holds firm in this market, a short from the 38% current wave retracement is a good way to join the prevailing trend. Until elected, I will have sells queued up from $59.74. With an initial stop at $60.01, this trade produces 27 ticks using a standard 1:1 risk vs reward ratio.

Even though we are seeing some positive action in this market, the daily bearish trend is still very much intact. With a bit of luck, we will see a bounce to the 38% retracement level and a shorting opportunity will come to pass.

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