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$55.00 In Play For WTI Following EIA Report

March WTI crude oil futures are one of the big movers and shakers today, featuring a bullish break toward $55.00. Following a disappointing EIA report on standing inventories, bidders piled into this market en masse. It appears that a test of $55.00 is imminent.

EIA Report Underforms Expectations

Tuesday afternoon marked the beginning of the weekly crude oil inventory cycle. The recent trend has been building supply. This week’s numbers suggest that the growth pattern may be drawing to a close:

Event                                         Actual      Projected       Previous

API Crude Oil Stocks                2.098               NA              6.550M

EIA Crude Oil Stocks               0.919M         3.155M          7.970M

January has brought consistent gains to WTI crude oil, about $10 per barrel in March futures. This collection of lagging supply numbers has fueled the fire and promoted today’s bullish breakout.

March WTI Crude Oil: Technical Outlook

While the forex is quietly awaiting the FED, energy traders are fully engaged in March WTI crude futures. Traded volumes have already eclipsed 460,000 contracts for the March WTI listing alone.

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

Overview: In a Live Update from yesterday, I talked about the importance of the $55.00-$50.00 area to WTI moving forward. That market call is being tested today as $55.00 is under siege from bidders.

In the weeks to come, the $55.00 to $50.00 range may set up as an intermediate-term top or bottom for WTI crude. While a retracement toward $52.50 is likely, early-February trading may bring more bullish action as the March contract rolls to April. It may be a bit premature, but the lows of January ($44.67) may set up as valid a bottom until early-fall 2019.

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Shain Vernier
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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