EIA Reports Massive Supply Build - Forex News by FX Leaders
EIA

EIA Reports Massive Supply Build

Posted Wednesday, June 5, 2019 by
Shain Vernier • 1 min read

The weekly crude oil inventories cycle is complete and supplies are on the rise. Earlier, the U.S. Energy Information Administration (EIA), reported a massive weekly stocks gain of 6.771 million barrels. This figure comes on the heels of Tuesday’s American Petroleum Institute (API) release of a positive 3.545 million barrel build. In short, oil supplies are up and prices are down.

July WTI Crude Oil Futures Continues To March Toward $50.00

Following a brief Tuesday respite, July WTI crude oil is back on the bear. Prices have fallen dramatically since today’s 10:30 AM EST release of the EIA report as traders have piled on the short side of WTI.

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

Bottom Line: Aside from $55.00, July WTI crude has consolidated at several psychological levels before extending to the downside. This was the case at $60.00 and $52.50 ― is $50.00 the next big-round-number to be hit?

It certainly looks that way, with growing supplies driving WTI prices toward an immediate test of $50.00. If this continues, going long July WTI from just above $50.00 isn’t a bad way to fade the trend. Until elected, I will have buys queued up from $50.27. With an initial stop at $49.72, this trade produces 100 ticks on a bounce from the $50.00 area.

The added levels of participation in July WTI are likely to produce at least a short-term rejection of the $50.00 barrier. While counter trend trades are always risky, the rewards can be great. With a bit of luck, we will see this trade go live during the late session or U.S. overnight.

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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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Olayiwola Abiodun
Olayiwola Abiodun
1 year ago

Sir , I want you to help me . I have buy orders on WTI and the lot size is very high and my account is seriously reduced as a result of downward move . I am still holding in to the positions . Is there any hope of rally from 51,41 area ?. Urgent reply will be much appreciated