crude oil

WTI Crude Oil Flat Post-Inventories

Posted Thursday, February 13, 2020 by
Shain Vernier • 1 min read

Even though traded volumes are robust, it has been a quiet session for WTI crude oil. March futures have entered rotation in the neighborhood of $51.00 and appear happy in this area. While this week’s crude oil inventory cycle showed a large supply build, bearish sentiment has been held in check.

EIA, API Report Massive Increases In Supply

For the second consecutive week, oil supplies have adhered to traditional wintertime trends in the Northern Hemisphere. Below is a brief look at the weekly figures:

Event                                    Actual       Projected      Previous

API Crude Oil Stocks            6.00M           NA                4.18M

EIA Crude Oil Stocks            7.459M       2.987M          3.355M

This is a strong collection of inventory numbers and reflects the seasonal lagging demand for refined fuels. However, the stockpiles haven’t translated into further selling of WTI. At this point, traders are evaluating many factors and considering the long-term viability of $50.00 per barrel oil pricing.

March WTI Crude Oil Futures: Monthly Outlook

For March WTI crude, the past year has been largely rotational. Since the epic sell-off of late-2018, prices have been contained by $60.00 and $50.00 a vast majority of the time.

March WTI Crude Oil Futures: Monthly Outlook
March WTI Crude Oil Futures: Monthly Outlook

Here are several intermediate-term levels to watch for the rest of February:

  • Resistance(1): Bollinger MP, $56.34
  • 2-Way Catalyst: Psyche Level, $50.00
  • Support(1): 2018’s Low, $45.76

Overview: At this point, the question is whether or not March WTI crude oil will break from the $50.00 level. If so, selling the Bollinger MP or buying 2018’s Low are ideal entries for a reversion-to-$50.00 strategy. In the event we see volatility pick up and one of these levels tested, a position trade may set up ahead of the March/April WTI futures contract rollover.

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