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EIA Reports Moderate Weekly Draw On Supplies

It’s Wednesday afternoon and that means that the weekly crude oil inventory cycle is complete. At 10:00 AM EST this morning, the EIA reported that U.S. oil inventories fell by 0.679 million barrels for the week of 27 November. While not a huge decrease, January 2021 WTI crude futures are on the march above $45.00.

The global oil complex is in interesting territory as we roll into the winter season. For a month, prices have risen precipitously. At this point, it appears COVID-19 demand concerns are taking a backseat to OPEC+ cuts and perceived Biden fracking bans. Given the trend of shrinking supplies, WTI may hit the vaunted $50.00 level before Christmas. Here’s a look at this week’s oil stocks figures:

Event                                               Actual              Projected            Previous

API Stocks Report                           4.146M                 NA                    3.800M

EIA Stocks Report                         -0.679M             -2.358M               -0.754M    

This batch of API and EIA supply figures came in mixed. At this point, it looks like traders are choosing to bid the EIA number as January WTI is up nearly $1.00 today.

WTI Futures Rally As EIA Reports Draw On Supply

November was a big month for January WTI. Prices jumped around $10 per barrel extending the uptrend from March’s lows. 

January WTI Crude Oil Futures (CL), Weekly Chart

Here are two levels to watch in this market ahead of the weekend break:

  • Resistance(1): November High, $46.26
  • Resistance(2): 62% Yearly Range, $46.43

Bottom Line: The key level for January WTI futures is shaping up to be the 62% Yearly Retracement at $46.43. If we see this area challenged, a shorting opportunity may come into play.

Until elected, I’ll have sell orders in the queue from $46.39. With an initial stop loss at $46.79, this trade produces 40 ticks on a standard 1:1 risk vs reward ratio.

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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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