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Fundamentals

During Tuesday's (November 14th) Asian session, WTI crude oil oscillated narrowly, and it is currently trading at 78.3 dollars/bbl. Oil prices dropped from highs yesterday, but the dollar plunged after the announcement of the better-than-expected CPI, which pushed up the oil price to 79.8, and was in line with our expectations. We emphasized yesterday that if the CPI did not support the dollar, oil prices could test the significant resistance at 80. Unfortunately, WTI crude oil failed since the momentum was insufficient. During the night, the crude oil stock was reported an accumulation, which wiped away the bullish sentiment. In the second half of the night, oil prices returned to their original level, demonstrating that it was impossible for oil prices to surge. Moreover, the growth of WTI crude oil needs further development, and investors should wait for substantial changes and trend movement. In addition, a little change occurred this week. Firstly, OPEC+ announced that the production increase was less than expected. Secondly, the International Energy Agency (IEA) published the latest monthly report on Tuesday, raising the expected demand for crude oil to 2.4 million bpd, 100,000 bpd more than the previous figure. It also mentioned that the crude oil inventories fell sharply in the third quarter, and the oil supply is still short. Nonetheless, the gap is significantly narrowed, and it appears that the IEA, OPEC+, and the U.S. EIA hold diverse forecasts on demand. Therefore, there will be a larger elasticity on the supply and demand sides, offering more opportunities to trade a small stop-loss with a big profit.

Inventories: As of the week of November 10th, the U.S. API crude oil inventories grew by 1.335 million barrels, compared to an expected decrease of 300,000 barrels.

Data: U.S. CPI rose 3.2% YoY in October, a new low since July, and it was lower than the expected 3.3%. Meanwhile, the core CPI rose 4% YoY, a new low since September 2021 with an expected rate of 4.1%.

News: The U.S. Department of Energy said Monday that it plans to buy 1.2 million barrels of oil to replenish the Strategic Petroleum Reserve (SPR). The DOE claimed that it chose two companies from 18 bids submitted to buy oil at an average price of 77.57 dollars per barrel.

Today's focus: U.S. October PPI, October annualized retail sales and EIA crude oil inventories.

Technical Analysis

Oil prices were stopped from rebounding and fell from highs, closing the chart with a long-upper-shadow. Technically, there is no bearish momentum in MACD indicators from the 1H chart, and the oil prices touched the Bollinger lower bands several times. Therefore, there will be rebounds in the hourly chart. Furthermore, the 4H chart is suppressed under the 60-day SMA with oscillations, and the MACD forms an expanding golden cross. Nevertheless, it is also at the Bollinger upper bands and getting substantial stress above. Comparingly, the MACD is near the oversold area and is tending to form a golden cross, indicating that WTI will be stable and rebounding later. In general, there will be rebounds in the 1H chart, and if WTI crosses above the 60-day SMA (78.9), it will support a rebound in a larger cycle.

Trading Recommendations

Trading direction: Long

Entry price: 77.500

Target price: 80.000

Stop loss: 77.000

Support: 76.800/73.800

Resistance: 78.500/80.000