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Fundamentals

During the Asian session on Tuesday (September 5), WTI crude oil fluctuated in a narrow range and is currently trading around 85.4 dollars per barrel. Yesterday, crude oil prices fluctuated in a narrow range at a high level without many trading opportunities, and the market was bleak. The main reason for the recent hot oil prices is still the market's expectation that OPEC+ will extend production cuts, and the US non-farm payrolls for August, which reinforced the expectation that the Fed will pause rate hikes in September and moderated macro bearishness. In addition, the unexpected expansion of manufacturing activity in China in August also sparked optimism that Chinese demand will pick up. Therefore, these factors together accelerated the rise in oil prices. However, the trading expectation has basically come to an end so far, and the future market still depends on the implementation of the policy. Saudi Arabia's production cuts were delayed in both July and early August, and it is clear that August's role has weakened significantly, only lasting a few trading days. This rally was also driven by expectations that Russia and Saudi Arabia will cut further supply. Perhaps oil prices may replicate the trend of August after the policy is implemented.

News: Hurricane Idalia could have an impact on oil production in the Gulf of Mexico, with OPEC+ rumored to be firmly cut at next week's meeting

Data for investors to focus on today is the API crude oil inventory report.

Technical Analysis

Trading at the daily timeframe, WTI prices barely closed with a bull candle yesterday, due to the lack of impetus. The daily chart also achieved 5 consecutive bull candles. Oil prices still remain positive, with a completely bullish trend. However, with the emergence of the small Doji star, bulls seem to be fatigued in the short term, enhancing the market’s vigilance against short-term take profit, which will drag oil prices lower. Although the momentum of bulls has decreased in the past two days, it is also very difficult to effectively break below the previous high of 84.5. As several attempts by oil prices to fall below 85 were unsuccessful, the bulls temporarily lost their enthusiasm to attack, and so did the bears, but formed a tug-of-war instead. In terms of technical indicators, the current MACD golden cross is in a widening trend, with all moving averages running upwards gradually. In general, the bulls still prevail, while the bears are suppressed. Traders can still go long at low in directions with less resistance currently. However, we recommend maintaining bullish rather than chasing long, and deep pullbacks are all opportunities to go bulls. If oil prices soar rapidly again, then it is time to consider cashing in on long profits gradually.

Investors are recommended to buy low and sell high. You can try to go short in the short term, referring to the rebound of the US oil to around 86.8 during the day. The stop loss is 87.3. The first target to take profit is 85.5, where you can cut positions and move your stop loss to break even, and the second target is 84.5. You can also go long in the short term if oil prices fall to around 84.5. The stop loss is 84.0. The first target to take profit is 85.5, where you can cut positions and move your stop loss to break even, and the second target is 86.8.

Trading Recommendations

Trading Direction: Long

Entry Price: 84.300

Target Price: 86.800

Stop Loss: 83.900

Support: 84.400/83.500

Resistance: 85.700/86.800