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Fundamentals

During Monday's (December 4th) Asian session, WTI crude oil oscillated downwards, and it is currently trading at 73.5 dollars/bbl. Last Friday, WTI grew slightly and reached 76.8. In the evening session, although there was not too much negative news, a sharp decline happened and WTI is still dominated by sentiments. In the past period, the crude oil market supply and demand expectations have been completely transformed, the market has also continued to strengthen the pessimistic expectations. But in fact, at present, OPEC+ also reached voluntary production cut results to improve the oversupply situation of the oil market in the first quarter. Surely, the premise is to look at the specific implementation of the production cuts, but as the agreement is reached, oil prices will be stable and supported. In the short term, a big range of fluctuations will take place, and further situations will be determined by the implementation of the production cuts. Besides, on the last trading day, our operation deviated slightly. We expected a rebound in the Asian session and the take-profit was not in place, leaving the market with a small stop loss. Yesterday, positive news was enough. The Israeli-Palestinian conflict restarted, and the U.S. replenished strategic crude oil inventories in advance. Although oil prices remained stable in a weak sentiment and were controlled by capital, short-selling continued. However, in this context, investors need to be cautious when chasing the shorts, and try to go long at lows. Especially, investors could have a better profit/loss ratio if they trade at the previous important support.  

Geopolitical aspects: The Palestinian-Israeli war restarted. The Israeli army said the resumption of military operations since the attack on the Gaza Strip more than 400 targets, has led to 200 deaths, a long-term ceasefire is difficult to reach.

News: the U.S. Department of Energy demonstrated: that the scheduled plan to buy back 4 million barrels of oil to replenish the Strategic Petroleum Reserve (SPR) has been advanced from the next summer to the next February.

Geopolitical aspects: The Palestinian-Israeli war restarted. The Israeli army said the resumption of military operations since the attack on the Gaza Strip more than 400 targets, has led to 200 deaths, a long-term ceasefire is difficult to reach.

News: the U.S. Department of Energy demonstrated: the scheduled plan to buy back 4 million barrels of oil to replenish the Strategic Petroleum Reserve (SPR) has been advanced from the next summer to the next February.

Today's focus: No heavy data, and investors should focus on this week's Nonfarm Payrolls data and crude oil inventory data.

Technical Analysis

Oil prices rebounded slightly in the Asian session yesterday, once reached 76.8, and began to fall sharply in the morning at 2:00 a.m. Finally, the daily chart closed lower. Meanwhile, recent oscillations are large, and profit protection and stop-loss control are significant for trading. Thus, investors should not get over-excited! At present, the current oil price is in the descending channel as the chart showed, and it is near the center of the channel. The initial support is near the previous low (the range of 72-72.5). If the support is broken, the important support below will be at the massive support area at this year's low (67), which is also the lower area of this channel. But as the current oil price is still in the range of 72.5-79.5, investors should buy low and sell high in this range.

Trading Recommendations

Trading direction: Long

Entry price: 72.500

Target price: 76.800

Stop loss: 72.000

Support: 72.500/70.000

Resistance: 76.800/79.500