EIA Reports Downturn In Oil Supplies

Posted Wednesday, January 15, 2020 by
Shain Vernier • 2 min read

Despite this morning’s lagging EIA stocks report, February WTI crude oil futures continue to experience significant selling. Prices are down by $0.40 per barrel and the early 2020 losing streak appears to be on the verge of extending. 

EIA Reports A Significant Decrease In Supply

For the seventh time in eight sessions, bearish pressure is dominating sentiment in February WTI crude. However, prices are off of intrasession lows and may spin into the green by the closing bell. Here is a quick look at this week’s inventory figures:

Event                                                                 Actual    Projected      Previous

API Weekly Stocks (Jan. 10)                           1.100M          NA               -5.945M

EIA Weekly Stocks (Jan. 10)                          -2.549M       -0.474M         1.164M 

For the second straight week, the API and EIA figures have come in on opposite sides of the ledger. As a general rule, the EIA report carries the most weight in the WTI market. Nonetheless, this hasn’t been the case today. A tight 100-tick session range and slight losses have defined price action in February WTI since Tuesday night’s electronic open.

WTI Crude Oil Stalls At 78% Fibonacci Support Level

On the daily chart below, a key 78% Fibonacci support level at $57.35 is standing tall. Following a post-EIA report plunge, prices in February WTI crude oil are up by more than $0.50 per barrel. Although the bounce may be temporary, the $57.35-$57.00 is shaping up to be a key technical area moving forward.

February WTI Crude Oil (CL), Daily Chart
February WTI Crude Oil (CL), Daily Chart

Here are three levels that will be on my radar for the near future:

  • Resistance(1): Bollinger MP, $59.96
  • Resistance(2): 38% Current Wave, $60.53
  • Support(1): 78% Macro-Wave Retracement, $57.35

Overview: For the moment, the 78% Macro-Wave Retracement ($57.35) is holding up as a short-term bottom in the February WTI market. This is a key area of support; if it gives way, WTI will likely put in a swift test of the 29 November 2019 low ($55.01).  

However, should this area hold, then a shorting opportunity from the 38% Current Wave Retracement ($60.53) may set up by Friday’s closing bell. If so, selling the zone around $60.50 is a solid trade location with the prevailing bearish trend.

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