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Fundamentals

In Wednesday's (August 9th) Asian session, WTI crude oil oscillated downward, and it is currently trading at $82.2/barrel. Yesterday, there was a V-shaped reversal in crude oil, and poor Chinese data in the Asian session caused a plummet in crude oil. Specifically, China's oil imports in July fell 18.8% MoM, with the daily import reaching the lowest level since January, shrinking 12.4%, and the U.S. crude oil declined from 82.5 to 79.5. In the U.S. session, EIA released a monthly report that raised China's GDP growth expectations, and oil prices rebounded quickly to 82.5 with oscillations. At present, the oil market expectation of Saudi Arabia extending production cuts fades. Some investors feel no substantial benefits, and more investors are worried about the OPEC+ production cuts under such a high oil price level. In general, the current oil prices are facing upward, but the difficulty to climb up further is increasing. Before the release of major good news, WTI will maintain oscillating at highs or will even retrace deeply.

News: The EIA monthly report predicts GDP growth of 1.9% in China for 2023, higher than the previous prediction of 1.5%. Moreover, the average price of Brent crude oil in the second half of 2023 is expected to be $86, which is about $7 higher than the previous forecast.

Today's focus: The crude oil stock data from the EIA.

Technical Analysis

Daily chart: U.S. crude oil depreciated during the daily session after getting suppressed at 82.5 and dropped below the 5-day and 10-day SMAs. In addition, the decline of U.S. crude oil increased, dragging the oil prices down to 79.5. Nonetheless, it rebounded abnormally in a V-shape last night and returned to the daily high at 82.6, closing the daily chart positively with a long-low-shadow, and the oil prices returned above the 5-day and 10-day SMAs. From the indicators, the SMAs are lining upward, indicating the domination of bulls. MACD forms a golden cross at the oversold area, but it tends to form a death cross. Therefore, investors should be careful of a plunge in WTI, and there was a declining signal yesterday, while WTI may not reverse the decline this time. For the evening session, the sentiment about the crude oil stock of EIA should be considered. If the data is supportive, there should be limited space above, and investors should not follow the upward trend. Instead, it is recommended to go short with small positions after WTI falls from highs. However, if the data is negative, there will be sufficient space below to support WTI.

Trading recommendations: Selling at highs. WTI will oscillate near the 5-day SMA (82.2). If WTI surges further, investors should focus on the massive resistance area at the daily high of 82.8. For below, investors need to keep an eye on the support at the 10-day SMA (81.3), then move the target to the 20-day SMA (79).

Trading Recommendations

Trading direction: Short

Entry price: 82.850

Target price: 80.300

Stop loss: 83.300

Support: 81.300/79.000

Resistance: 82.700/83.500