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Fundamentals

During the Asian session on Tuesday (August 22), WTI oil price fluctuated to the downward and is currently trading around 79.9 dollar/barrel. Yesterday, the oil price surged and then rebounded, which was mainly driven by the fading expectation of China’s demand and the uncertainty of US rate hikes in September. Meanwhile, the import of China declined rapidly. According to China's General Administration of Customs, crude oil imports from Saudi Arabia were 5.65 million mt in July, down 14% from last year and down 31% from June, which also weigh on oil prices.

Data: The number of US oil rigs fell for six consecutive weeks by 28 units， which is its lowest level since February 2022. It suggests that the recent improvement in the price environment has not been enough for producers to pause their plans to taper their activities. With drilling activity declining steadily (oil production down about 15% YoY), Rystad Energy sees signs of slowing growth in US shale fields in the coming months. Weak oil prices, coupled with a sharp correction in natural gas prices, have forced operators to spare capacity, as the outlook for global demand growth remains murky.

Technical Analysis

Trading at the daily timeframe, WTI crude oil surged and then fell back yesterday, failing to extend the bullish trend. The price had already reached 81.6, but then dropped rapidly and fluctuated below 80, finally closed around 80. As we said earlier, the pullback of US crude oil is still not over, and the rebound is only for a better fall. At the same time, we also prompted to go short at 81.5 and fully cashed out the profit. At present, technically, the MA5 has begun to cross the MA10 and MA20, and the MACD indicator has also maintained a widen death cross. The price still remains a bearish trend and require further adjustment. During the day, the price may be around 79.8 at MA5. If the day does not rise quickly to recover, the lower side may test the support around 78.5. By contrast, it may be able to try upwards to break through the resistance at Monday's high of 81.6. During the day, traders can still buy lows and sell highs. In addition, you should also pay attention to two probable supports at 78.5 and 79.8 for going long in the short term.

It is recommended that investors should buy lows and sell highs. During the day, you can test short in the short term according to a rebound to around 81.2 at MA10 and MA20. The stop loss is 81.6, and the first target is at 79.8, where you can cut your positions and move your stop loss to break even. The second target is 78.5. Also, you can test long in the short term if the oil price declines to around 78.5, with the stop loss at 78 and the position to take profit at 80.

Trading Recommendations

Trading Direction: Long

Entry Price: 78.500

Target Price: 80.500

Stop Loss: 780.000

Support: 79.800/78.500

Resistance: 81.600/82.500