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Fundamentals

During the Asian session on Tuesday (June 13), WTI crude oil fluctuated in a narrow range, currently trading around $67.5 / barrel. Oil prices fell sharply yesterday, finding support as low as 67 in late May, mainly due to nervousness ahead of the Fed meeting. The Fed will conclude its two-day policy meeting on Wednesday. While the Fed is expected to leave interest rates unchanged, investors are worried that the Fed may resume raising rates in July, supporting a stronger dollar. High-interest rates will last longer, and expectations of a recession will be further strengthened.

News: The US Department of Energy said it had signed supply contracts with five companies to deliver 3 million barrels of crude to the Strategic Petroleum Reserve (SPR) in August at an average price of $73 per barrel. The US government has previously said it will begin replenishing reserves when oil prices reach or below $72 per barrel. The energy department said the crude will be shipped to the SPR base in Big Hill, Texas, while a new tender has been launched for the delivery of another 3 million barrels of crude to the Big Hill base in September. Besides, the deadline for bids was 20 June and the results would be announced at the end of June.

Overall: The dollar weakened sharply in the preceding period, coupled with the surge in European natural gas, and crude oil followed suit. However, although the news of the release of Iranian crude oil has been debunked, oil prices are still deeply affected, which is enough to show that the current market disturbance on the supply side may be more direct and more effective. The attitude of OPEC+ to protect oil prices through production cuts is clear, while Iran is the biggest uncertainty for short-term supply. If there is no recession in the US economy and the return of Iranian supply in July, then $70/barrel will most likely become the bottom of the year for WTI crude oil. Oil prices will usher in a trend rebound as the US backfills SPR in the right place in August. On the contrary, if the recession is combined with the return of Iranian crude oil, the probability of a deep fall in oil prices is higher.

Technical Analysis

Trading at the daily timeframe, the price found support at 67 after its slump yesterday. The main force also completed a round of liquidation with the help of emotions. We have already emphasized yesterday that if the oil price drops below 68.5, bulls will close their long positions and price will dip further to 67. That was the case. If the current market attempt to plummet again and approach the previous low of 64, it will have to look for an unexpected rate hike at tonight's Wednesday meeting.

It is strongly recommended that investors do not go short during the day! Aggressive traders can go long at 67-67.5 with stops set around 66.5. The first target for take profit is 70.2, a capital protection order needs to be set after a part of the take profit, and the second target is 73.2.

Trading Recommendations

Trading Direction: Long

Entry Price: 67.000

Target Price: 70.500

Stop Loss: 66.000

Support: 66.900/64.000

Resistance: 70.300/72.300