It’s Wednesday and the weekly EIA crude oil stocks report has been released to the public. The figure came in at -994,000 barrels, a modest drop when compared to last week’s -9.91 million. So, for the first two full weeks of the Joe Biden administration, U.S. oil stocks are down by more than 10 million barrels. While it’s early to assume Biden’s executive orders have negatively impacted American oil output to this degree, it looks like producers are ratcheting back operations.

Typically, the North American winter season features supply draws and somewhat stagnant crude oil pricing. 2021 is unique, as supplies are shrinking and WTI crude is gaining market share. Today, March WTI futures have posted a session top of $56.26 ― a level last seen in January 2020.  

In the aggregate, there will be three market drivers to watch for WTI crude oil: Biden policy, COVID-19 global reopening, and USD devaluation. Right now, the USD is down big over the past year, demand continues to return from various COVID-19 shutdowns, and Biden executive orders have reduced forthcoming U.S. energy output. Given these underpinnings, a bullish stance toward global oil prices is warranted.

For the USD/CAD, bullish crude means bearish exchange rates. The past two days have reinforced this correlation, with rates falling upwards of 75 pips.

EIA Report Prompts Oil Rally, USD/CAD Tests Daily Support

The USD/CAD is off again today as WTI prices have taken out the $56.00 handle. At press time (about 12:15 PM EST), rates are just above 1.2750 and testing a key 38% Fibonacci support level. 

For the remainder of the session, there is one key level on my radar:

• Support(1): Daily SMA, 1.2751

Bottom Line: Until today’s close, I’ll have buy orders in the USD/CAD queued up from 1.2752. With an initial stop loss at 1.2722, this trade produces 30 pips on a standard 1:1 risk vs reward ratio.