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Fundamentals

During the Asian session on Thursday (December 7), WTI crude oil fluctuated upward slightly and is currently trading around 69.9 dollars per barrel. After the oil price fell below 72 yesterday, the stop loss accumulated in the vicinity was swept away, and it seemed too strong to stop. Oil prices fell directly below 70 in the US market, completely ignoring positive news yesterday. US commercial crude oil inventories fell by 4.63 million barrels and production fell by 100,000 b/d for the week the EIA reported. Oil prices still fell sharply after the release of the data. Yesterday, the price also had a small stop loss of $0.5, which is harmless, but it would be different if you are subjectively paranoid! Yesterday, the market also taught stubborn investors another lesson, paranoia will gain nothing. In Soros's words, only those who learn to run away can see the sun tomorrow. To emphasize, it's normal to make a wrong decision, but your price should be small and hurtless. If the mistake leads to paranoid frequent contrarian operations, the result will be fatal. The luck mentality is unacceptable, and it only depends on luck to get back the floating loss, but the liquidation is based on capability! If you are more serious, you will lose. Therefore, you need to reduce subjective factors and the trading frequency. For the market, although the effect of OPEC+ did not satisfy investors, it was at least a 2.2 million b/d cut in the first quarter of next year. Moreover, Saudi Arabia has only emphasized further cuts in oil production in the first quarter, which does not rule out the continuation of production cuts after the first quarter. The sharp cut will not still cause oil prices to plummet. Since the end of the production cut meeting, oil prices have fallen by $10. But this is the market, which is both a winner and a loser. The current plunge may no longer be a fundamental factor, but the capital is the king. For weak emotions, the bulls are powerless to resist, as the trade washing should be thorough! I still believe that the fundamentals will not support oil prices below $70. Bears use panic to suppress the market, and the weakness of oil prices could not predict the bottom yet, but it is not recommended to participate in shorting. Investors need to be patient and wait for the end of the trade washing and chances for bulls. At the moment, traders should focus on the scramble around 70. If oil prices continue to weaken, support can be seen around 67. Investors can then look for opportunities to gradually allocate bullish positions in the long term.

Inventories: In the week ended December 1, the US EIA commercial crude oil inventories, excluding strategic reserves, fell by 4.633 million barrels to 445 million barrels, a decrease of 1.03%, compared with the expected decrease of 1.35 million barrels and a previous increase of 1.61 million barrels. Crude oil inventories in Cushing, Oklahoma, rose by 1.83 million barrels. Strategic Petroleum Reserve (SPR) inventories rose by 330,000 barrels, or 0.09%, to 351.9 million barrels. Gasoline inventories rose by 5.42 million barrels, compared with the expected increase of 1.027 million barrels. Refined oil inventories rose by 1.267 million barrels, compared with the expected increase of 1.526 million barrels.  

Today, investors need to pay attention to the number of US initial jobless claims and the monthly rate of wholesale sales in October.  

Technical Analysis

Oil prices showed a one-way move downward yesterday, falling as low as around 69.2, and finally closed with a big bear candle, achieving 5 consecutive bears. It can be said that the market is in an extremely weak state, but the risk of short-chasing is very high. If you want to take advantage of the weakness to take short positions, try to focus on the resistance in the range of 71.2-71.8. If the rebound is blocked, you can test short with small positions. The support level is initially focused on yesterday's low near 69.2, and further, look at the strong support around 67! For the bulls, it is still necessary to wait for the passing of this emotional wave, that is, to wait patiently for today and tomorrow. If the market can build a bottom successfully, you can try to go long with small positions. If oil prices continue to fall to around 67 and hold firm, it will be an excellent opportunity for a profit/loss Ratio!

Trading Recommendations

Trading Direction: Long

Entry Price: 67.000

Target Price: 71.500

Stop Loss: 66.500

Support: 69.200/67.000

Resistance: 71.500/72.500