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Abstract: \Since May, the international crude oil market has been in turmoil. The price of WTI crude oil has dropped all the way from around US$ 78.00 per barrel to US$ 63.64 per barrel and then rebounded to US$ 70 per barrel. At present, the performance is still under pressure.

Fundamentals

Under the background of great uncertainty at the macro level and after the gap has been filled, in early May, there was a situation of "failure for both bulls and bears" in the capital game in the crude oil market, and the capital showed a high sensitivity, which may continue for some time.

The news that the U.S. will replenish its strategic crude oil reserves and the news that the Group of Seven may ban Russian natural gas imports provide some support for WTI crude oil. Both could lead to a drop in global crude oil supply levels, thus keeping prices stable.

The upcoming EIA and API inventory report could affect crude oil volatiliy in the middle of the week, especially as traders expect inventories to fall back to earlier unexpected increases. However, another large increase could confirm a significantly weaker demand situation, which could lead to further declines.

The U.S. retail sales report, released later today, could also mean some big swings in commodities as consumer spending conditions could affect the expectations of the Federal Reserve's tighter policy. Pessimistic data will further reinforce expectations of a pause in interest rate hikes, which could mean a fall in the USD and a rise in riskier assets such as crude oil.

If market expectations for the risk of a U.S. debt default continue to weaken this week, oil prices may continue to rebound in the near term. If debt risk is ultimately not effectively managed, the entire class of assets will experience a resonant decline.

Overall, if the risk aversion in the market improves, all the favorable news from the supply and demand side of crude oil itself will be invalid, and the short-term oil price may fall further at any time. In the long run, the expected supply shortage in the crude oil market in the third quarter is still on the horizon. On the supply and demand side, the signal of contraction in oil demand is not obvious, but the demand is still in the process of seasonal recovery.

WTI crude oil is still in a bearish trend and the price may continue to fall to the first support level of US$ 69.33, which is an overlapping support level and has proved to be an important one in the past. If such support persists, it could lead to a rebound in prices.

However, if the price continues to fall below this level, it may fall further to the second support level of US$ 67.56, which is a multi-band low support level.

On the bright side, the first resistance level is US$ 73.97. This overlap with the 38.20% Fibonacci retracement could challenge any bullish momentum. If prices reach that level and fail to break through, we could see a reversal in support.

The second resistance level is US$ 76.91, which is another overlapping resistance level aligned with the 61.80% Fibonacci retracement. This could be a significant barrier to any bullish price movement and could push prices down.

Between these levels, there is an intermediate resistance level of US$ 71.73, which is also an overlapping resistance level that matches the 61.80% Fibonacci retracement. This level could become a secondary barrier to price increases.

Technical Analysis

WTI crude oil is still in the correction mode, as the former supporting zone where the price rose from US$ 69.39 to US$ 71.75 did not continue to rise further (this is close to the 61.8% Fibonacci retracement that can restrain the rising space); Obviously, the upward momentum is still weak. If so, prices could continue to fall back to a fluctuating low of US$70.00 or less.

However, the technical indicators still seem to point to more rising space. On the one hand, 100 SMA is still higher than 200 SMA, indicating that the path of least resistance is upward. A breakthrough in the zone of interest could trigger a recent price test high of US$ 73.43 or close to resistance at US$ 74.00.

On the other hand. Stochastics are moving lower, but oscillators seem to be pulling up, suggesting that bullish pressure may be about to return. At the same time, the RSI is moving higher, and the bulls may follow suit, giving the bulls the upper hand.

Overall, although the short-term trend is still bearish, the performance of capital sensitivity will gradually weaken over time, and the bulls may make a comeback. It is recommended to buy the dips.

Trading Recommendations

Trading direction: Long

Entry price: 70.00

Target price: 75.50

Stop loss: 67.40

Deadline: 2022-05-30 23:55:00

Support: 70.53, 69.39, 67.55

Resistance: 71.81, 72.59, 73.81