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Fundamentals

During Thursday's (November 2nd) Asian session, WTI crude oil oscillated narrowly, and it is currently trading at 82.3 dollars/bbl. Yesterday, WTI crude oil retraced as expected and rebounded by 2 dollars during the European and the U.S. sessions. We emphasized that after the fall, the bearish momentum was completely released, and WTI would rebound soon. Investors who have entered at lows would make considerable earnings. The rebound yesterday, on the one hand, was a technical rebound after the oversold because the risk premium of crude oil disappears while the situation in the Middle East escalates. On the other hand, the Fed implied that the policy tightening cycle may end, and the U.S. economic data was resilient. Besides, the Eurozone PMI is also better than expected, there are no pre-hype signs of a recession in demand at present. In addition, the market may begin to speculate on Saudi Arabia's extension of production cuts. Thus, the oil price may become stronger after getting stable.

Inventory: As of the week of October 27th, the EIA crude oil stocks increased by 773,000 barrels. The crude oil stocks in Cushing, Oklahoma were 272,000 barrels more, and the stocks in Strategic Petroleum Reserve (SPR) were unchanged at 351.3 million barrels compared to a previous number of 213,000 barrels. In contrast, East Coast's diesel stocks fell to their lowest level since October 2022.

Geopolitical News: Israeli-Palestinian conflict has resulted in over 9,000 deaths in Gaza. Israeli army says ground forces have completed the siege of Gaza City and says the term "ceasefire" is not on the table. A Houthi spokesman said, "We will continue to launch more targeted strikes using missiles and drones until Israel stops its aggression." Netanyahu, with a poll approval rating of just 28%, is facing a reckoning that could come at any time.

Today's focus: October U.S. Nonfarm Payrolls, Unemployment, and Non-Manufacturing PMI.

Technical Analysis

Crude oil closed higher yesterday and covered the decline in the previous 2 days. Despite dropping to 81.1 once, it rebounded significantly and closed at 82.3. Although WTI crude oil was weak in the past few days, the support at 80 is strong, and the oil price never fell below this level. When WTI reached 80.5, it usually rebounded rapidly, indicating a clear phase bottom. More importantly, the growth yesterday has recovered all the losses in the past days. If WTI closes upward today, the weak trend will turn strong and WTI can reach the shoulder area. Technically, the double bottoms pattern signal is maintained. In addition, the bearish momentum is released after a series of depreciations, and the MACD indicators are close to the oversold area, suggesting a limited space below. Thus, we keep a bullish view on WTI, and go long before it reaches the shoulder area, and try to focus on the resistance between 83 and 83.5.

Today's trading recommendations: Buy at lows. If WTI retraced back to 81.5, try to go long with small positions and set the stop-loss at 81.0. To take profits, the first target will be at 83.5, where investors can reduce the position size and move the stop-loss to breakeven, and put the second target at 85.5. If WTI plummets to 80.5 again, investors should enter and go long, and stop loss by 0.5 dollars. The target to take profits is the same as the first target above.  

Trading Recommendations

Trading direction: Long

Entry price: 81.500

Target price: 83.500

Stop loss: 80.000

Support: 80.000/78.300

Resistance: 81.500/83.500