EIA Reports A Surprise Draw On Supply

Today’s EIA Crude Oil Stocks report has surprised analysts and energy traders. The figures came in significantly negative, indicating a deviation from traditional fall seasonal trends. Subsequently, the weekly inventory cycle and reports of fresh OPEC production cuts have drawn bids to WTI. For the session, December WTI crude oil futures are near flat, trading just above the $54.25 level.

EIA Inventory Figures Departs From Fall Seasonality

This week brought a surprise draw in EIA Crude Oil Stocks and an expected build in Tuesday’s API report. Here is a quick look at the data:

Event                                                               Actual     Projected    Previous

API Weekly Crude Oil Stocks                        4.45M            NA              10.50M

EIA Weekly Crude Oil Stocks                      -1.699M       2.232M          9.281M

Although these two reports are somewhat contradictory, there is no doubt that supply decreased week-over-week. Although the API suggested a build in supplies, the figures still fell by more than 5 million barrels from the previous report. Further, the EIA took this trend to the extreme showing a decrease of almost 11 million barrels. All in all, it is little wonder that WTI continues to challenge the $55.00 handle as we roll into late-week trade.

USD/CAD Resumes Its Bearish Trend

Pretty much all week long I have broken down the current state of the USD/CAD. Today has brought few surprises, as the mid-week bump in crude oil pricing has prompted a resurrection of the daily bearish trend.

Here are two natural support levels to watch for coming sessions:

• Support(1): Psyche Level, 1.3050
• Support(2): Psyche Level, 1.3000

Bottom Line: For the time being, a bearish bias toward the USD/CAD is warranted. Rates are on the slide once again today following the EIA report and have not yet found a bottom.

If we continue to see strength in the WTI market, the USD/CAD will very likely fall. However, the fundamental outlook and fall seasonality suggests that global oil is headed down over the intermediate-term. So, buying a significant dip in the USD/CAD isn’t a bad way to play the current price action.

Until elected, I will have buy orders in the queue from just above the 1.3000 handle at 1.3011. With an initial stop at 1.2984, this trade produces 25 pips on a swift bounce from the 1.3000 psychological level.