EIA Reports Surprise Oil Stocks Build

Today at 10:30 AM EST, the weekly crude oil inventory cycle was completed. The Energy Information Administration (EIA) posted a 5.479 million barrel build in crude oil supplies, much to the surprise of energy traders. As a result, June WTI futures have traded in a tight daily range, falling about $0.25 for the session (as of 12:30 PM EST).

EIA Inventory Figures Shatter Expectations

It is no secret that the seasonal trends in oil supply and demand largely dictate WTI pricing. These tendencies suggest that stocks on hand lag going into late-May through mid-August. Subsequently, greater demands for refined fuels during this period typically drive crude oil values higher. Given these considerations, this week’s inventories cycle through traders a bit of a curve ball:

Event                                     Actual         Projected    Previous

API Crude Oil Stocks           6.900M              NA           -3.096M

EIA Crude Oil Stocks           5.479M            1.255M      -1.396M

While it isn’t the best idea to put a whole lot of stock into a single week of growing inventories, these figures are worth noting. The API statistics show an almost 10 million barrel swing in week-over-week stocks, while the EIA shows a 6.7 million barrel change. If nothing else, this set of lagging inventories numbers may provide a dip in the WTI market.

June WTI Crude Oil Futures: Daily Chart

As we have covered all week, the uptrend in June WTI crude oil is alive and well, with $65.00 now in the rearview mirror.

Here are the levels to watch until Friday’s closing bell:

• Resistance(1): Psyche Level, $67.50
• Support(1): 38% Current Wave Retracement, $65.28

Bottom Line: Buying the 38% Current Wave retracement ($65.28) is a solid opportunity to join the uptrend in June WTI crude oil. As long as the Swing High of $66.60 remains intact, I will have buy orders queued up from $65.31. With an initial stop at $64.94, this trade produces 35 ticks on a slightly sub-1:1 risk vs reward management plan.