Chapter 8 Accumulation Continues, Worries of Over-Supply Return(12.06)
Fundamentals
During Wednesday's (December 6th) Asian session, WTI crude oil oscillated narrowly, and it is currently trading at 72.5 dollars/bbl. Oil prices plunged from high with serious oscillations, as they declined to 72.3 and then rebounded quickly to 74.3. Then, the API data indicated that the crude oil accumulation exceeded market expectations, and the oil price retraced all the gains but was still above 72.1. Yesterday, our strategy was to go long at 72.5, and the take-profit target of 1.5 dollars was reached. Then, the remaining position failed to reach the second take-profit target at 75.5, and we closed the positions. This is how trading works, just make the plan and wait for the market situation, especially for profits, because the only thing we can control is the loss! From yesterday's market, the continued rebound in stocks strengthened the concerns of oversupply, coupled with Saudi Arabia's downward sales of oil prices in Asia, the signals of weakness in the oil market were exposed again. This is the main reason for the downward trend yesterday. In addition, according to the price reaction, the current outlook of investors on next year's production cuts remains unchanged, and pessimistic expectations have been lingering. Now, investors' confidence in future oil prices is necessary, which needs to be improved by accumulations. However, the fact is that investors' confidence is beaten. Probably, this round of oil price trends will be like what happened at the beginning of June when OPEC+ announced that production cuts began in July. During June, oil prices oscillated at the bottom and waited for the recovery of market confidence. Therefore, we can expect a wide oscillating pattern and skip the unilateral market. For some long-term investors, try to wait for the opportunity to build up some bullish positions.
News: Saudi Arabia will face Asia's Arab light crude oil prices cut by 50 cents, and it cuts the price of all crude oil for Asia in January.
Inventory: API crude oil inventories rose by 594,000 barrels in the week of December 1st, exceeding expectations.
Today's focus: U.S. ADP employment, the October trade account, and EIA inventories.
Technical Analysis
WTI crude oil oscillated widely yesterday, once reaching the lowest level at 72.2 and the highest level at 74.3, closing the daily chart lower to achieve the 4-consecutive decline. Moreover, the bearish momentum has been released completely and the oil price returned to the previous low (the range from 72 to 72.5), or the upper area of the oscillation in June and the starting point of July's appreciation. Currently, WTI crude oil is still running at the lower area of the previous channel, and there is valid support. So, investors should keep going long with small positions. Regarding the 1H chart, the oil price is running at the Bollinger lower bands, and in the 4H chart, the MACD indicator suggests a trend of golden cross at low, which is also near the Bollinger lower bands. Therefore, it is better not to go short, and buy at lows when a reversal signal appears. For today, investors should trade from 72.300 to 74.500, where aggressive investors could buy low and sell high with more attention to buying 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
