WTI Sells-Off Following EIA Inventories - Forex News by FX Leaders
Oil is Weak on Monday

WTI Sells-Off Following EIA Inventories

Posted Wednesday, March 27, 2019 by
Shain Vernier • 2 min read

Since the EIA inventories report came out at 10:30 AM EST, May WTI crude oil futures have fallen more than $0.50 per barrel. Traders have once again backpedaled from long positions above $60.00. Given today’s price action, one has to wonder if WTI has put in a weekly top at $60.38.

The EIA Inventory Report Is In…

Earlier in the session, the EIA Crude Oil Stocks report came across newswires, concluding the weekly inventories cycle. Here is a look at the hard data:

Event                                    Actual        Projected      Previous

API Crude Oil Stocks             1.927M            NA          -2.133M

EIA Crude Oil Stocks            2.800M        0.309M       -9.589M

Both the API and EIA numbers came in well above expectations, on the positive side of the ledger. The big story here is the 13+ million barrel week-over-week swing in the EIA statistic. This is a mammoth figure and one that has effectively kept a lid on WTI pricing.

$60.00 Is Still The Key Number In WTI Crude

Tuesday brought a bullish breakout and the first session close above $60.00 for 2019. However, the optimism didn’t last for very long, as price of May WTI crude has returned to the $59.25 area.

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

Here are the levels to watch for the near future:

  • Resistance(1): Double-Top $60.38-39
  • Support(1): 38% Retracement, $58.28

Bottom Line: In a Live Market Update from last Friday, I issued a long trade recommendation from just above the 38% retracement level in this market. The play turned out to be a quick winner and the $58.28 area has stood tall through several tests.

Well, if it ain’t broke, don’t fix it! Until elected, I will once again have buy orders in queue from $58.31. With an initial stop loss at $57.94, this trade produces 25 ticks on a sub 1:1 risk vs reward management plan.

May WTI crude oil has become compressed between $60.00 and $58.00. My bias toward this market remains bullish. However, one has to respect the Double-Top as resistance and the likelihood of traders waiting for April before driving prices higher.

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About the author

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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