At 10:30 AM EST, the U.S. Energy Information Administration (EIA) released their weekly crude oil inventory numbers to the public. The figures complimented seasonal trends, showing roughly a three million barrel draw on supply. However, as of press time (11:45 AM EST), WTI crude oil is not reacting as expected. Prices are in the red, having put in a test of the $57.00 handle.

EIA Reports Decreasing Supply

The past six weeks have brought a series of negative oil inventories reports. Of course, this comes as no surprise as we are in the heart of travel season and peak demand. Here is a look at this week’s hard data:

Event                                             Actual     Projected     Previous

API Crude Oil Stocks                  -1.401M          NA           -8.129M

EIA Crude Oil Stocks                  -3.116M      -2.694M      -9.499M

On a week-over-week basis, oil supplies have actually increased significantly. Although still negative, the drawdown rate has slowed by more than 6 million barrels according to the API and EIA. This collection of figures suggests that consumption may be poised to fall and supply to grow as July draws to a close.

WTI Crude Tests The Waters Beneath $57.00 

The past four sessions have been no picnic for energy bulls. August WTI crude oil futures are off around $3 from last Friday’s close.

Overview: From a technical standpoint, August WTI has dropped below support on the daily timeframe. In the event this market cannot rally and close above $57.50 today, there may be more downside to come as late-week trade gets underway.

If you are trading WTI futures or USOIL, be aware that rollover will begin to influence price action as early as tomorrow. August WTI futures are currently trading at a 3/2 rate over the September contract, largely due to today’s EIA report. As volumes become diluted further, be on the watch for choppy price action and reduced liquidity facing the August issue.