EIA Reports 4.278 Million Barrel Supply Build

Posted Thursday, November 12, 2020 by
Shain Vernier • 2 min read

Due to the observance of the Veteran’s Day holiday, this week’s EIA Crude Oil Stocks report was delivered one day late. Subsequently, this morning’s brief brought a substantial weekly build in the U.S. oil supply of 4.278 million barrels. December WTI crude futures appear to be ignoring the figure, holding firm in positive intraday territory.

Right now, the global oil dynamic is fascinating. Grumblings from OPEC+ suggest that output levels are likely to stay depressed for the coming 3-6 months. Coupled with optimism over an effective COVID-19 vaccine, traders are betting that intermediate-term demand outpaces supply. Both factors have been good to WTI prices, which are now firmly north of $40.00.

EIA, API Release Weekly Stocks Numbers

24-hours late, the weekly oil inventories cycle is now complete. Here’s a quick look at the hard data:

Event                                             Actual         Projected       Previous

API Crude Oil Stocks                    -5.10M             NA                  -8.01M

EIA Crude Oil Stocks                    4.278M         -0.913M          -7.998M

Well, what can we say about this data set? The API and EIA reports for the week of 6 November completely contradict each other. This discrepancy is one reason why traders are ignoring the stocks data in favor of OPEC+ and vaccine news. Right now, macro-factors are dictating sentiment toward global oil, not the periodic API and EIA reports.

$42.00 Back In Play For December WTI

For December WTI crude oil futures, a bullish bias remains warranted. Prices are above the 38% retracement, signaling that this week’s uptrend is intact.

December WTI Crude Oil (CL), Daily Chart

Here are the key levels to watch until Friday’s closing bell:

  • Resistance(1): Spike High, $43.06
  • Support(1): 38% Current Wave Retracement, $40.77

Bottom Line: Very quickly, the outlook for global oil has shifted. Now, there is a case to be made for the long side of the market. Accordingly, a late-week dip in December WTI pricing may bring a buying opportunity into play.

Until Friday’s close, I’ll have buy orders in the queue from $40.69. With an initial stop loss at $40.29, this trade produces 40 ticks on a static 1:1 risk vs reward ratio.

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