EIA Reports Large Oil Supply Build

The weekly crude oil supply reports are behind us and fall seasonality finally appears to be taking hold of the market. Earlier today, figures from the U.S. Energy Information Administration (EIA) were released to the public. The EIA’s report showed a dramatic 2.27 million barrel week-over-week growth in supply. At press time (about 1:30 PM EST), it looks like WTI crude futures are finally under some bearish pressure, falling more than 1.5% on the session.

Oil Supply Is On The Rise According To The API And EIA

From a strictly seasonal standpoint, December WTI crude oil trading above $56.00 is a bit of a surprise. However, this may be soon to change. According to this week’s supply stats, U.S. oil stocks are on the rise: 

Event                                                 Actual   Projected   Previous

API Crude Oil Stocks                       4.260M         NA            0.592M

EIA Crude Oil Stocks                       7.929M        1.515M       5.702M

Both the API and EIA stocks numbers are up big from this time last week. With each showing the oil supply to have grown by more than 2.2 million barrels, it appears as though the increased demand of the late-summer months has subsided.

December WTI Crude Falls

Going into today’s session, the weekly chart for December WTI crude oil showed robust support to be present near the $56.00 handle. As we roll into the late-session, it looks like this level is going to be tested.

December WTI Crude Oil Futures (CL), Daily Chart

Here are two support levels worth watching ahead of today’s closing bell:

  • Support(1): Bollinger MP, $56.05
  • Support(2): Weekly SMA, $55.95

Bottom Line: In the event we see weekly lows tested due to today’s growing oil supply reports, the two weekly support levels outlined above may come into play. Until today’s closing bell, I will have buy orders queued up from $56.06. With an initial stop at $55.74, this trade produces 30 ticks on a slightly sub-1:1 risk vs reward management plan.

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ABOUT THE AUTHOR See More
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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