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Fundamentals

During the Asian session on Wednesday (April 26), crude oil futures fluctuated to the upside. U.S. consumer confidence has fallen to a nine-month low in April, fueling fears of a recession. As First Republic Bank reported a deposit flight of more than $100 billion on Monday, it has stoked fears of a potential banking crisis. Meanwhile, the demand for safe havens has driven the dollar higher as concerns about the global economy deepened. In addition, traders are still worried that European and American banks that are fighting inflation keep raising interest rates, resulting in a slowdown in economic growth. Therefore, energy demand in the US, UK, and EU has been weakened. Due to market concerns about the economy and a stronger dollar, crude oil futures weakened yesterday, ending the two-day rally. Among them, WTI crude oil futures for delivery in June 2023 fell by US$1.69 per barrel to a settlement price of US$77.07 per barrel, which has fallen to a new low of US$76.445 per barrel in the past week.

Overall: The financial environment and demand will suppress oil prices in the short term, with the hawkish attitude of the Federal Reserve and the expectation that the European and American economies will enter a recession in the second half of the year. At the same time, Russian oil exports are still strong. As they have not yet entered the production reduction period, the supply side cannot provide too much support for oil prices. However, with OPEC+ taking effect and more evidence of China's oil demand growth, oil prices will rebound to $84 per barrel and higher in the coming months.

Technical Analysis

From a daily perspective, MACD extended the death cross signal at the high. Oil prices are near the MA5, which are currently suppressed by the MA10 and MA20. Despite the bears having the upper hand, the price is currently around a nearly one-week low. The strong support below is at the gap of 75.7. Without a large substantial impact, it may be difficult to break through. Oil prices remain weak until the MA10 of 79.3 is broken. Initial support is around the intraweek low of 76.5, with further support near the March 31 high of 75.7. If the breakthrough is smooth, the short-term bearish signal will be strong, and the next strong resistance will look at the 72.5 line.

Trading Recommendations

Trading Direction: Long

Entry Price: 77.000

Target Price: 83.000

Stop Loss: 74.500

Support: 75.700/72.500

Resistance: 80.000/83.300