July WTI futures have been on a wild ride over the past 48 hours, falling dramatically since the release of this morning’s EIA Crude Oil Stocks report. Prices have probed beneath $56.75 (Wednesday) and are drawing heavy participation between $57.00 and $58.00. Almost 1.5 million contracts of July WTI have changed hands since Wednesday’s electronic open ― a staggering figure.

The EIA Reports Shrinking Inventories

This week’s inventory cycle is now complete. Both the EIA and API reports showed draws on supply, falling more in line with seasonal expectations. Here is a look at the hard data:

Event                                          Actual        Projected       Previous

API Crude Oil Stocks                -5.265M            NA               2.400M   

EIA Crude Oil Stocks                -0.282M        -0.857M           4.740M

Down significantly from last week, crude oil supplies finally showed some signs of shrinking. Growing stocks have placed bearish pressure on WTI values throughout May; perhaps dwindling supplies will create a sense of scarcity and attract bidders in June.

The Downtrend In July WTI Remains Valid

Earlier in the session, July WTI tested and failed to eclipse the 38% Current Wave Retracement ($59.58). At this point, the daily downtrend is valid and $55.00 looks to be the next psychological level up for scrutiny.

Overview: July WTI is in a position to extend the losses of May going into the final trading day of the month. Prices are trending south on intraday time frames and energy bears are dominating the market.

In reality, it has been a strange month for crude. Seasonal trends point to increasing WTI prices beginning in late-April and running through the end of August. It looks like 2019 is going to be a rare year for energies, with global oil hitting peak demand on a downswing.