Due to the Labor Day holiday, the weekly Energy Information Administration (EIA) Crude Oil Stocks Report was delayed until today. The EIA’s number came in on the plus side of the ledger, measuring 2.032 million barrels. This represents a week-over-week gain of more than 11 million barrels and suggests that fall seasonality is upon us.

The EIA And API Agree: Oil Supplies Are Going Up

Following closures of Gulf Coast production due to Hurricane Laura, oil stocks fell dramatically last week. Now, they are on their way up as the peak demand summer season is drawing to a close. Here’s a look at this week’s API and EIA figures:

Event                                         Actual                  Projected            Previous

API Stocks Report                    2.97M                        NA                   -6.36M

EIA Stocks Report                    2.032M                 -1.335M                -9.362M

Each of these reports shows a steep week-over-week change in U.S. supplies. Now, the question is will a supply glut develop going into the fall? At this point, one is inclined to believe that oil stocks will continue to grow and WTI prices stagnate within or around the $35.00-$40.00 zone.

WTI Crude Oil Enters Consolidation

The past week has been a big one for October WTI crude oil. Prices have fallen more than $5.00 per barrel amid heavy selling. Nonetheless, bids have hit the market north of $36.00, temporarily stopping the bleeding.

For the remainder of the week, there are two levels to watch in this market:

• Resistance(1): 38% Macro Wave Retracement, $39.05
• Support(1): Swing Low, $36.13

Bottom Line: If October WTI crude oil manages to break out from consolidation, I’ll be looking to short the 38% Macro Wave Retracement. As long as $36.13 is a valid Swing Low, sell orders will be queued up from $38.94. With an initial stop loss at $39.26, this trade produces 64 pips on a 1:2 risk vs reward management plan.