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Fundamentals

In Tuesday's (August 15th) Asian session, WTI crude oil shocked upward, and it is currently trading near $82.3/bbl. Yesterday, the oil price dropped slightly downward due to the strong dollar and Chinese demand concerns that cover the impact of supply tightening. Technically, crude oil has been in an overbought area for a long time, suggesting an overbought retracement. Currently, the market is too optimistic about the US economy and the supply gap, while economic realizations in the Eurozone and China are showing little resistance. Although Saudi Arabia and Russia production cuts are now expected to cut oil inventories for the rest of the year and push up oil prices, the current concern is whether the demand in the U.S. and China will reach the expected level. Besides, the U.S. economy tends to deteriorate under high interest rates, and China's? It is less likely to recover China's economy as it was before the pandemic. Then, the summer travel peak season passed, there will be great uncertainty in oil prices, and China's demand is precisely the factor that was speculated in the early days. Furthermore, since China's data is worse than expected, the expected demand for crude oil is impacted, and the price trend will be turned soon.

News: Iran exports more than 1.4 million bpd, exceeding the budget level as of March 2024, but the exact data is not released. Moreover, crude oil production will increase by 110,000 bpd to 3.3 million bpd by Aug 22nd, Oil Minister Javad Owji said.

Today's focus: U.S. monthly import price for July, and U.S. monthly retail sales data for July.

Technical Analysis

Daily chart: WTI extended yesterday's oscillation and retracement. It is suppressed by 82.6 above and retracing to 81.2, closing the daily chart negatively. Although the descending space was not enlarged, the consolidating trend was confirmed. At present, the crude oil trend is dissatisfying with the bearish divergence staying all the time and remaining in the overbought area. If this situation maintains, there will be limited space above. A good result comes from patience, a surge in oil price will not be instructive, and the bulls will hesitate. Today, WTI will probably oscillate between the 5-day and 10-day SMAs (82.3-83). Nonetheless, considering a clear bearish divergence in the daily chart, an expansion in retracement is possible. Thus, investors should keep short at highs in the near term.  

Trading recommendations: Today, if WTI rebounds to the 5-day SMA (82.6 to 63), investors could go short in the near term. If it appreciates to 83.3, it is also better to go short with small positions and set the stop-loss at 83.5. To take profits, the first target will be 82, where investors could move the stop-loss to breakeven, and the second target should be near the 20-day SMA (80).  

Trading Recommendations

Trading direction: Short

Entry price: 83.000

Target price: 83.500

Stop loss: 80.000

Support: 82.000/80.000

Resistance: 83.500/84.800