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Fundamentals

During the Asian session on Wednesday (December 13), WTI crude oil edged up and is currently trading around 68.9 dollars per barrel. Oil prices plunged again yesterday. The sentiment in the Asian session was stable and the price rose as high as $72.2, but it was not able to break through 72.5. Yesterday we highlighted that if the price did not break above 72.5, then it would fall back to 70.5 again. The result was expected, but also unexpected. We underestimated the strength of bears. In the US market, WTI price fell below the previous low of 69.0 in one fell swoop, with the lowest level around 68.4. The reason was the decline in demand. In particular, as the released US CPI data unexpectedly strengthened, the expectation of interest rate cuts continued to be revised, and the blow of high-interest rates to the economy was gradually reflected. The market turned to recession trading again. Yesterday, bulls could only watch the announced API inventory exceeding expectations and sigh that the is the king. What kind of story the capital chooses, and what kind of market is decided. Yesterday, our strategy of going long at %70.5 incurred a small loss of $0.5. But we are not sad as the current oil price continues to move towards our expected 65-67 area. It's like we are waiting for sunrise before dawn.

News: The US Energy Information Administration (EIA) on Tuesday cut its 2024 Brent crude oil price forecast by $10 per barrel to $83 per barrel. The EIA said it predicts US crude oil production to increase by 1.02 million barrels per day (b/d) this year to a record 12.93 million b/d, breaking the previous record of 12.3 million b/d set in 2019. On Tuesday evening, climate negotiators came together to discuss a draft deal that would force countries to quickly abandon fossil fuels. The compromised text is a stronger indication of the world's commitment to reduce greenhouse gas emissions while eschewing the controversial pledges to “phase out” fossil fuels, which have drawn criticism from Saudi Arabia and other oil-producing countries.  

Inventories: US API crude oil inventories fell by 2.349 million barrels in the week of December 8, but gasoline inventories increased by 5.764 million barrels.  

Today, investors need to pay attention to retail sales data and the Fed's interest rate decision and dot plot tonight.  

Technical Analysis

The rare three consecutive bull candles were covered by a big bear candle yesterday. The oil market is back to weakness as the price has fallen below the bottom of 69 and is starting to move towards the lower edge of the previous running box. At this point, we keep a bearish view but don't go short now! Investors need to look for low levels to go long with a high profit/loss ratio. Back to the technical side, the current 1-hour MACD has the potential to form a golden cross in the oversold area, so there may be a rebound at the one-hour level first. Currently, the oil price is in the lower Bollinger band, showing a bullish signal. However, considering the bearish piercing pattern in the daily chart, WTI is still expected to close lower today, depending on the rebound strength in the small timeframe. It is not recommended to chase selling but to focus on the buying opportunity around $67.

Trading Recommendations

Trading Direction: Long

Entry Price: 67.000

Target Price: 70.000

Stop Loss: 66.500

Support: 67.000/65.000

Resistance: 70.000/72.500