EIA Reports Draw On Crude Oil Stocks

As a general trading rule, pricing GAPs are eventually filled in. July WTI crude oil has begun to do exactly that, challenging the GAP area ($41.88-$37.33) with this morning’s intrasession high ($38.18).  Given today’s negative EIA Crude Oil Stocks report, WTI may be in a position to grind higher as traditional summer seasonality kicks in.

EIA Reports Lagging Supply

Last week brought a major surprise for energy traders as the U.S. Energy Information Agency (EIA) reported a large week-over-week increase in supplies. This figure ran counterintuitive to late-Spring seasonality and brought COVID-19 demand fears back to the forefront. Now, it appears that supplies are coming back down to earth. Here’s a quick look at the weekly oil inventory cycle:

Event                                             Actual                Projected           Previous

API Crude Oil Stocks                   -0.483M                 NA                       8.731M

EIA Crude Oil Stocks                  -2.077M                3.038M                 7.928M

Both the API and EIA reports came in negative this week, showing massive seven-day drops. These figures suggest that the demand for refined fuels and energy is growing. If falling supplies become a summertime trend, WTI values will be in a great position to extend the gains of late-spring.

WTI Tests The GAP Area

The weekly chart below is representative of July WTI at Tuesday’s close. It gives us a good look at the technicals ahead of this morning’s report-fueled test of the GAP.

Overview: Right now, the key zone to watch in July WTI is the pricing GAP between $37.33 and $41.88. Today’s early bullish action tested this area; as we move into the future, look for prices to grind north and fill in the remainder of the GAP ($38.18-$41.88). While it may take some time to hit these levels, the energy bulls are in control of this market, driven by dwindling EIA supply figures.

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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