Bearish Attack on Crude Oil – EIA Stockpile Report Ahead - Forex News by FX Leaders

Bearish Attack on Crude Oil – EIA Stockpile Report Ahead

Posted Wednesday, August 7, 2019 by
Arslan Butt • 2 min read

WTI crude oil prices fell more than 1% on Wednesday as trade tensions between the US and China intensified worries about weakening global demand. Moreover, economists have expected a less drop in crude oil inventories than before.

For now, the price action is heavily dependent on the crude oil stockpile report.

EIA Crude Oil Inventories

At 14:30 GMT today, the EIA (Energy Information Administration) is due to report crude oil inventories. The EIA inventory report comes out one day after the API report and these usually share a positive correlation.

The American Petroleum Institute (API) reported a crude oil inventory draw of 3.4 million barrels for the week ending Aug 1, compared to analyst expectations of a 2.848-million barrel draw.

The stockpiles’ draw this week compares to last week’s large draw of 6.024 million barrels, bringing the net inventory moves for the year into net draw territory, according to API data. A day later, the EIA confirmed an inventory drawdown of 8.5 million barrels.

During the US session, traders will be following the EIA report which is also due to report a draw of -2.9M vs. -8.5M barrels. However, this draw isn’t as big as the previous one and it may not drive a bullish trend in crude oil. Well, it looks like bulls are hesitating to store the oil inventories over the escalation of the US-China trade war.

Crude Oil – Technical Analysis

Crude oil has violated a long-held sideways range of 55.70 – 54. On the lower side, oil has an open room to go after 52.15.

The 50 and 100 periods of EMA are pushing oil prices lower, suggesting a bearish trend. While the RSI value stays around 14, which is extremely oversold. But commodities tend to stay in the oversold zone for longer periods before taking reversals.

I’m looking to stay bearish below 52.90 with a stop loss above 53.20 and take profit of around 52.60.

Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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