Following this morning’s EIA crude oil inventories report, WTI is off modestly. The action is somewhat surprising as energy bulls have taken every opportunity to bid crude oil higher for the past several months. One would think today’s EIA figure would have prompted bullish price action ‒ so far, it hasn’t.

Due to the Memorial Day holiday, this week’s U.S. crude oil inventory cycle was delayed by one session. It’s now in the books and here are the highlights:

Event                                                        Actual                  Projected               Previous

API Crude Oil Stocks                              -5.360M                 -2.114M                 -0.439M

EIA Crude Oil Stocks                              -5.080M                 -2.443M                 -1.662M

A quick look at these figures tells us that summer seasonality is now in full swing. In addition, the EIA reported that gasoline inventories (+1.500 million barrels) and refinery utilization (+1.7%) are both up week-over-week. Given these figures, it’s difficult to see July WTI not cracking $70.00 in the next few sessions.

EIA Reports Supply Draw, WTI Slightly Bearish

For July WTI crude futures, this morning’s intraday high came in at $69.40. Traded volumes are still on the July contract at about a 4/1 clip over August. As we kick off June’s commodity trade, a heavy bullish bias is warranted for WTI futures and USOIL.

Overview: On the news front, Iran is once again grabbing headlines. According to a report from Politico, two Iranian warships are due to enter the Atlantic Ocean later today. Apparently, the ships are en route to Venezuela with unclear motives. An anonymous source in the U.S. National Security Council had this to say on the possibility of Iran brokering arms to Venezuela:

“We [US] would reserve the right to take appropriate measures — in concert with our partners ― to deter the delivery or transit of such weapons.”   

Any tensions in this area would likely spike crude oil prices in the short term. Given the overtly negative EIA weekly supply report, WTI has the potential to test $70.00 and $75.00 sooner rather than later.