It’s Wednesday mid-session, and that means that the weekly crude oil inventory cycle is now complete. Earlier this morning, the U.S. Energy Information Agency (EIA) reported a second-consecutive week-over-week supply build. This is an interesting trend as growing late-spring supplies contradict traditional crude oil seasonal tendencies. For now, the oil supply is strong and WTI pricing has entered heavy rotation.

EIA Reports Uptick In Oil Supplies

Thus far, June’s demand for refined fuels has been relatively stagnant. Subsequently, the results are growing supplies and WTI consolidation. Here’s a quick look at this week’s figures:

Event                                               Actual                   Projected          Previous

API Crude Oil Stocks                      3.857M                      NA                   8.420M

EIA Crude Oil Stocks                      1.215M                    -0.152M            5.720M

Although the weekly increase in crude oil supplies has dropped dramatically week-over-week, inventories are still on the rise. However, there are a few bright spots for WTI bulls. Gasoline supplies fell by 1.7 million barrels and storage at the Cushing, Oklahoma hub fell by 2.6 million barrels. So, at least the demand for refined fuels is showing signs of life moving into the summer months. 

WTI Futures Roll From July To August

The focus is now upon August WTI crude oil futures, with today’s traded volumes gaining a 6/5 advantage over July. Prices are holding firm just above $38.00 and within striking distance of the early-March GAP area.

Here are the key levels to watch in this market:

• Resistance(1): GAP Area, $42.17 – $38.98
• Support(1): Bollinger MP, $35.35
• Support(2): Daily SMA, $34.98

Overview: The first half of June has brought us a test and rejection of the daily GAP area ($42.17-$38.98) in August WTI crude. Nonetheless, the intermediate-term uptrend is intact and a bullish bias warranted. Should we see a drop in oil supplies in coming weeks, a test of the upper bounds of the GAP at $42.17 will become probable. If not, prices are likely to hold firm in anticipation of traditional summertime seasonality.