It’s Wednesday and the EIA has released its weekly crude oil stocks report. Today’s figures are down big, coming in at -3.135 million barrels. If you remember, last week brought an EIA supply build of 15.189 million barrels ― this morning’s numbers paint a much different picture.

On the pricing front, January WTI crude oil is bullish and on the doorstep of $48.00. However, it’s important to remember that rollover from the January to February WTI contract is underway. Volumes are currently slightly above 50/50 in favor of January. Subsequently, it’s a good idea to anticipate the February contract to be the new front-month issue by tomorrow.

Below is a quick look at this week’s crude oil supply figures:

Event                                                  Actual                    Projected            Previous

EIA Crude Oil Stocks                        -3.135M                   -3.500M              15.189M

API Crude Oil Stocks                         1.973M                        NA                    1.141M

Right now, a bullish bias is warranted for WTI crude oil. In fact, I expect a test of $50.00 to unfold in relatively short order. Although $50.00 crude in December is a surprise, it isn’t all too uncommon. In fact, last year at this time, WTI was trading closer to $60.00.

Crude Oil Stocks Down, WTI Up

The technical picture for WTI crude oil is simple: the trend is up and $50.00 is in sight.

Here are the key levels facing this market for the immediate future:

• Resistance(1): Psyche Barrier, $50.00
• Resistance(2): 78% Yearly Range, $51.73

Bottom Line: Barring a major reversal, there should be a few WTI shorting opportunities coming our way by Christmas. The first of which may set up from just beneath the $50.00 handle.

Until elected, I’ll have sell orders queued up from $49.71 in February WTI crude futures. With an initial stop loss at $50.29, this trade produces 75 ticks on a slightly sub-1:2 risk vs reward ratio. Remember, this trade is for the February WTI contract, which will likely be the new front month beginning tomorrow.