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Fundamentals

During Tuesday's (November 14th) Asian session, WTI crude oil oscillated at lows, and it is currently trading at 73.1 dollars/bbl. Oil bears dominated in the U.S. session yesterday, breaking the double bottom at 75 and the stop-loss worsened the situation. Then, the panic sentiment dragged down the oil price to a new phase low, indicating that the market sentiment had reached the freezing point. Without time to think about the fundamentals, investors considered more about the current position, and it is more important to save the positions. Although the oil price plummeted in recent days, there is no obvious news to promote the trend. Meanwhile, stocking inventory is expected to ignite the concern about the low demand due to the global economy's weakening demand concerns. Now, a large discount appears in the pattern, which is far beyond the market's expectations. At the same time, OPEC+ oil-producing countries must worry because the oil price is back to the original point after a year's hard work. It is not true that they do not try hard, but the investor wants more. Now, only the supply side can stabilize oil prices as the demand is in the verification stage, and the market has not yet been expected to weaken, which is also the market strategy, that we can take profits only when one side has fallen. We have explained before, that market fundamentals are stories, and the best reaction is to follow the pattern! Yesterday, we decided to go long with small positions and traded a small stop loss of 0.5. It was an acceptable loss for us. For the next plan, try to buy at lows with the target of $10! Set the stop loss of $2 for 4 test positions.

Supply: the American Petroleum Institute (API) showed in the monthly report that U.S. oil shipments rose 4.6% YoY to 31 million bpd in October. Moreover, oil supply increased 3.2% to 28.8 million bpd in October, while U.S. gasoline demand in October fell 0.4% YoY, and aviation fuel demand rose 2.4%. Oil output in October increased by 6.1% to 13.1 million bpd, a new record high, and rose 53,000 bpd MoM.

Data: U.S. initial jobless claims was 231,000 last week, a new high since the week of August 19, while the expected number was 220,000, and the previous number was revised to 218,000. As of the week of November 4th, U.S. continuing jobless claims reached 1.865 million, a new high in nearly two years, which was expected to be 1.847 million.

Today's focus: No heavy data and the market will digest the stock for now. More importantly, the OPEC+ meeting progress should be considered.

Technical Analysis

Oil prices plunged unilaterally. After dropping below the previous low at 75, oil prices accelerated the depreciation with many stop-loss orders appearing. Then, crude oil rebounded slightly at the phase bottom near 73.8 but depreciated significantly to 72.7 under the bearish momentum, closing the daily chart with a big bearish candle and oscillating at lows. Technically, a deep oversold appeared in the MACD of the 1H chart, dragging the daily chart to a serious oversold area. In the near term, WTI crude oil will maintain a weak pattern, but a rebound is urgently needed and may appear at any moment. Thus, it is not profitable to chase the current bearish trend, and we should trade small stop-loss and go long with small positions at lows.  

Trading Recommendations

Trading direction: Long

Entry price: 72.500

Target price: 78.000

Stop loss: 72.000

Support: 72.500/70.000

Resistance: 75.000/78.000