EIA Reports A Decrease In Crude Oil Supplies

The weekly crude oil inventory cycle is complete and it appears that demand may be returning to the market. Both the EIA and API stocks numbers grew, but at a slower pace than last week. With June WTI futures testing the $25.00 handle, one has to wonder if a return to bullish WTI late-spring seasonality is on the horizon.

The EIA, API Crude Oil Stocks Numbers Are In…

Exploding supply and lacking storage have been the headlines for oil throughout the past two months. This week’s API and EIA inventory reports indicate that the growth of stocks-on-hand may be slowing:

Event                                                   Actual             Projected           Previous

API Crude Oil Stocks                          8.440M                 NA                   9.978M

EIA Crude Oil Stocks                          4.590M              7.759M              8.991M

These supply stats are still exceedingly high, especially for the spring season. However, they are down from last week’s figures. Be on the lookout for the API and EIA supply numbers to normalize as May wears on.

June WTI Futures Fall Beneath $24.00

For the first time in six sessions, June WTI crude oil futures are in position to post a red daily candle. Prices are down significantly today, falling beneath the Daily SMA and $24.00.

Here are the key levels to watch as the electronic session winds down:

• Support(1): Bollinger MP, $22.14
• Support(2): 38% Current Wave, $19.96

Bottom Line: In the event we see a late-week sell-off in June WTI, a buying opportunity may come to pass. As long as the current weekly high ($26.08) remains intact, I’ll have buy orders in queue from $20.26. With an initial stop at $19.66, this trade produces 60 ticks on a standard 1:1 risk vs reward management plan.