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Fundamentals

During the Asian session on Monday (September 11), WTI crude oil fluctuated in a narrow range and is currently trading around 86.5 dollars per barrel. Yesterday, crude oil prices fluctuated in a high narrow range at a high level without much additional news. There are several factors supporting the rise of oil prices in the oscillation trend. On the one hand, the market is still worried about the tightening of supply due to the extension of production cuts in Saudi Arabia and Russia. On the other hand, US crude oil inventories continued to cut inventories sharply. In addition, the PMI economic data in the US also performed strongly. However, oil prices have shown signs of weakness, especially under the premise of a large inventory destocking. Oil prices have not lifted up but have seen a small correction. Investors need to be wary of the gradual weakening of the supply-side benefit after the release of Saudi Arabia and Russia's production cuts, which will correspond to the downward adjustment in the daily chart after the bulls take profits and leave. The inventory data this week is more critical. If it can maintain inventory cuts larger than expected, oil prices will be able to maintain a strong position, and it will be just a matter of time before it hits 90. But if it is not as expected, or even accumulates, then oil prices may have a deep pullback to 83 to test support. We maintain a medium-term bullish view on oil prices, but a short-term correction is also imperative and traders should not chase up.

News: It is worth noting that the number of oil rigs operating in the US climbed this week for the first time since June as oil prices have continued to rise since early July. In the week ended September 8, the number of US online wells was 513, up 1 from the previous week and down 78 from a year earlier.

Data for investors to focus on today is crude oil inventories report as well as US CPI data this week.

Technical Analysis

Trading at the daily timeframe, crude oil still maintained an oscillation upward trend last week, with the whole trend constantly going upwards. However, oil prices showed two retreats after coming under pressure at 87.5, and bulls temporarily paused at 87.5. After testing, the high of 87.5 did not break three times, forming a local triple-top pattern. At present, oil prices have room and demand for the pullback, but still keep the bullish trend unchanged. However, the upper resistance is even greater than the previous one, and the price is testing the support near the MA5 during the day. Before the release of inventory and CPI data, the market may be biased towards fluctuation, with a range of 85.5-87.5, where investors can buy low and sell high.

Investors are recommended to buy low and sell high. You can try to go short in the short term, referring to the rebound of the US oil to around 87.5 during the day. The stop loss is 88. The first target to take profit is 85.5, where you can cut positions and move your stop loss to break even, and the second target is 84.5. You can also go long in the short term if oil prices fall to around 85. The stop loss is 84.5. The first target to take profit is 86.5, where you can cut positions and move your stop loss to break even, and the second target is 87.5.

Trading Recommendations

Trading Direction: Short

Entry Price: 87.500

Target Price: 85.500

Stop Loss: 88.000

Support: 85.500/84.500

Resistance: 87.500/89.500