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Fundamentals

During Monday's (December 11th) Asian session, WTI crude oil ascended slightly, and it is currently trading at 71.8 dollars/bbl. Last week, oil prices once retraced to 69, and a doji star appeared at the bottom on Thursday. Besides, there were signs of stabilization last Friday, and WTI oscillated at 70 during the Asian session. After the announcement of employment data, WTI rose sharply in the U.S. session, once reached 71.9, and our long orders at 70 achieved the first take-profit target of 1.5 dollars. At present, the fundamentals of the oil market have not changed much, and the market is still trading expectations. Now, recession expectations still dominate and keep WTI under a bearish trend. But as we emphasized in the previous article, the market will respond late, and the result needs to be verified by the data. However, oil bears will not be satisfied in a situation where the structure of supply and demand will be improved when the production cuts start. Therefore, the current oil price may not represent the future market's supply and demand, and the oil price will reach 80 dollars/bbl. Soon or later. In addition, the key now is whether the oil bears can suppress the market for wash trading by using the bearish data, and then tell the story of the supply cuts to take profits from the bulls. But here comes another problem, the short logic seems to be more difficult to sustain. If the next data is no longer bearish, then the oil bears will tell the story of the production cuts and supply gaps in advance, which is what we need to pay attention to. Now, we should keep a bearish view but not go short. Every plunge is a chance for us to go along with a small stop loss to win a big rebound, and the profit and loss ratio will be substantial.

Data: November's non-farm payrolls increased by 199,000, exceeding the expected 180,000. Also, the unemployment rate descended from 3.9% to 3.7%, while the labour force participation rate increased to 62.8%, showing a continuous strong job market.

Today's focus: Tuesday's heavy U.S. CPI, Thursday's retail sales data, and the interest rate resolution (economic forecasts and dot plot will be included) to be held Thursday morning.

Technical Analysis

WTI crude oil closed higher during the last trading session and achieved a 2-consecutive gain. In the early opening today, WTI crude oil kept strong, but it was still under pressure and stayed below 72. From the structural point of view, the averages are still lined downward and indicate a bearish structure. Nonetheless, after a big drop, WTI crude oil may not reach the target as it is supported by the current low-price buyers and the fundamentals. Therefore, a space for short-term trades is available. However, the trend also looks more complicated, and we need to pay attention to the resistance near 72.5. If WTI crude oil can effectively break through upward, the bulls' confidence should return and WTI crude oil will turn into a bullish trend sooner or later. But if WTI crude oil fails to close with gains and recover 72.5 today, it will certainly add the risk of an oil price retracement, which is also in line with the technical trend. Furthermore, if WTI crude oil drops to the range from 65 to 67 to gain momentum, it will rise smoothly later. Today, investors should temporarily look at the shock range from 70.5 to 73.8 and try to buy low and sell high with more effort in buying at lows.

Trading Recommendations

Trading direction: Long

Entry price: 70.500

Target price: 73.800

Stop loss: 70.000

Support: 70.500/67.000

Resistance: 72.500/74.500