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Fundamentals

During Monday's (November 13th) Asian session, WTI crude oil oscillated narrowly, and it is currently trading at 76.5 dollars/bbl. Last Friday, WTI crude oil rebounded from the bottom and reached 77.6. It closed the chart higher, but the upper momentum was insufficient. In addition, Saudi Arabia and Russia reiterated the commitment to voluntarily cut crude oil supply by the end of the year, and oil prices rose slightly. However, the continuous stocking and the worry that the Israeli-Palestinian conflict would cause the supply disruption of the worries subsided dragging down the oil price, realizing 3 consecutive losses in a single week. Meanwhile, the overall news of the weekend was more negative than positive. For example, the Fed officials continued to make hawkish remarks, and a resolution on the Palestinian issue was made by Joint Arab-Islamic States Leaders (which stays in the condemnation without substantive plans of action). All these would have negative impacts on WTI except for the U.S.-China talks. Nevertheless, this is likely to be another lie made by the U.S. With the weakening supply and demand, investors can expect that next month, Saudi Arabia and Russia may extend or expand the production cut. Although it can support the oil price, the inventory, and economic fundamentals will determine the price at last. If there is a surplus phase of the crude oil market, production cuts are only passive. It may work on oil prices but is way too far from 'effective'.

Macro: U.S. initial jobless claims rose to 217,000 for the seventh consecutive week as of the week of November 4th. At the same time, China's CPI fell 0.2% YoY in October, ending with a negative figure after two months, which is also lower than the forecast -0.1%. This figure remained flat in September. In October, total exports of goods and services also shrank faster than expected, and the trade account totaled 56.53 billion dollars in October when the forecast was 77.71 billion dollars versus the previous $82 billion dollars. Moreover, October exports came in at an annualized rate of -6.4% versus forecasts of -3.3%.

Today's focus: No important data, and investors should focus on the U.S.-China talks.

Technical Analysis

Last Friday, WTI crude oil stabilized and rebounded to 77, closing the daily chart positively. However, the weekly chart closed lower for 3 consecutive days, indicating a weak momentum, which is hard to reverse. Technically, MACD forms a death cross in the 1H chart, and there are continuous long-upper-shadows in the candlestick chart, suggesting a possible depreciation. Nonetheless, MACD dropped to the oversold area, meaning that the momentum has been released effectively. Also, a bull candle appeared after the doji star last Thursday, suggesting a possible growth in WTI. Therefore, WTI will not decline continuously in the daily chart, and investors should focus on the support near 73.8. For aggressive investors, try to go long with small positions, and buy in after a plunge.

Today's trading recommendations: Buy at lows. If WTI plunges to 74.8, try to go long with small positions and set the stop-loss at 74.3. To take profits, the first target will be at 77.4, where investors can reduce the position size and move the stop-loss to breakeven, and put the second target at 80.0. If WTI plummets to 73.8 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: 74.800

Target price: 80.000

Stop loss: 74.300

Support: 74.800/73.800

Resistance: 77.400/80.000