crude oil

EIA Reports A Massive Draw On Inventories

Posted Thursday, December 6, 2018 by
Shain Vernier • 1 min read

Increased consumer demand over last month’s Thanksgiving holiday weekend is being given the credit for today’s lagging oil inventory figures. For the week of November 30, the EIA is reporting a draw of -7.323 million barrels. This number is well below industry projections of -0.942 million and the previous week’s +3.577 million barrels.

Regardless of the negative numbers, January WTI crude oil futures continue to show weakness midway through the session. Prices have fallen beneath the $51.00 level and appear poised to revisit $50.00. The week’s opening GAP up in WTI has been filled and energy bears have taken this market over.

Post EIA Action In WTI Crude

It stands to reason that such a negative EIA figure would bump the price of January WTI north. However, this scenario has not yet developed, with price running to the $50.08 level shortly after the release.

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

For the rest of the session, there are two levels on my radar:

  • Support(1): Psyche Level, $50.00
  • Support(2): November’s Low, $49.41

Bottom Line: The $50.00 level is likely to create heavy 2-way action. It may set up yet again as an intermediate-term bottom. However, the number that will bring more credence than $50.00 is November’s low at $49.41. WTI is currently extremely bearish. A test beneath November’s low should wash out a high volume of short-term position longs taken on Monday following the G20 Summit.

Until elected, I will have sell orders queued up from $49.40. Using a tight 12 tick stop loss, this trade should be good for a fast 8-12 ticks using a sub-1:1 risk vs reward management plan.

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