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Fundamentals

During Tuesday's (December 5th) Asian session, WTI crude oil oscillated downwards, and it is currently trading at 73.5 dollars/bbl. Yesterday, oil prices fell from highs, and they depreciated for 3 days by 7 dollars after the production cuts. This situation was like the production cuts in June, as the oil price did not rebound when OPEC+ announced in June that production cuts would start in July. In contrast, oil prices started to grow at the end of June after several attempts to touch the bottom.  Now, the bearish momentum has been released, and the depreciation slows down when it's time to take profits. Meanwhile, the wash trading is not horrible, and it becomes the process of building the bottom. When there are enough bullish supports, WTI crude oil will rebound. Yesterday, the market appeared more supportive factors. Firstly, the U.S. Department of Energy officials stressed buying back oil reserves as much as possible, which also shows that the U.S. accepts the price currently. Secondly, Saudi Arabia emphasized that the 2.2 million bpd of production cuts will be implemented. If necessary, OPEC+ oil production cuts "absolutely" can be continued after the end of the first quarter, which is an obvious warning to shorts. If oil prices keep declining, the production cuts will be extended, indicating the determination to keep the oil price. Moreover, the current market has been trading ahead of the U.S. interest rate cuts in March next year, and it is possible that the fundamentals of the oil market start to support the oil bulls. For investors, it is significant to keep buying at lows. In fact, many investors know the right direction, but the main problem is the poor implementation, which is fundamentally the lack of faith. Therefore, investors should establish an effective trading system, start to implement the plan from a small position, and avoid any subjective actions.

News: U.S. Deputy Secretary of Energy: We will buy back as many oil reserves as possible. The U.S. will take advantage of low oil prices to replenish its reserves, which are limited due to physical constraints. Saudi Energy Minister Abdulaziz said: 2.2 million bpd of production cuts will be delivered," adding that he believes the 2.2 million bpd cuts could even overcome the inventory build-up that usually occurs in the first quarter. He also demonstrated that OPEC+ oil production cuts could "absolutely" continue beyond the first quarter if needed.

Today's focus: U.S. November ISM non-manufacturing PMI, October JOLTS job openings, and API crude oil inventory data. For this week, investors should focus on the Nonfarm Payrolls and the ADP data.

Technical Analysis

Oil prices rebounded slightly yesterday and reached 74.8. Then, it depreciated and closed the daily chart lower. However, the depreciation yesterday was weakened as oil once dropped to 72.7 and stayed above the first support at 72.5. Technically, the running range is unchanged and oil price is oscillating in the center of the channel. If the oil bears dominate, the oil will keep descending to the lower area of the channel to find support. On the contrary, it may rebound to test the resistance of the upper area. Nonetheless, this pattern will maintain until the end of this month, or before 2024. Today, the trading range will start from 72.5 to 75.5, and aggressive investors should buy low and sell high with more effort to buy at lows.  

Trading Recommendations

Trading direction: Long

Entry price: 72.500

Target price: 75.500

Stop loss: 72.000

Support: 72.500/67.000

Resistance: 75.500/79.500