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Fundamentals

During the Asian session on Monday (June 12th), WTI crude oil declined slightly, and it is currently trading near $69.5/bbl. Meanwhile, two major pieces of news, the Fed date decision, and CPI data, will be announced this week. It is expected that the upper and lower space in WTI crude oil will be limited during the beginning of this week, pending further guidance.

Position: As of June 6th, 2023, the non-commercial net long position of the WTI crude oil futures contract was 172,400 lots, an increase of 9,900 lots compared to last week with an enhanced bullish sentiment later. Besides, the non-commercial net short position of the Brent crude oil futures contract was -52,000 lots, an increase of 24,300 lots compared to last week with an enhanced bullish sentiment in later sessions.

In general, the extension of OPEC+'s production cut (to the end of 2024), and the deepening production cuts from Saudi Arabia support the oil prices. However, due to the demand concerns caused by the weak economic data from China and the U.S., WTI has lost all previous gains. From inventory and the fundamentals of demand/supply, the oil market maintains stability and heads upwards. Therefore, this round of plummet resulted from the uncertain Iranian supply news and the concerns of the internal disagreements regarding the failure of OPEC+'s production cuts. Anyway, only short-term sentiment is affected, while the current fundamentals are strong now. As the peak summer driving season approaches, concerns about U.S. fuel demand may be raised, while the crude oil market will be ignited at any time based on the replenishment of U.S. strategic petroleum reserves.

Technical Analysis

Daily chart: WTI crude oil starts to fall today. The daily oscillation range is not affected despite the weak trend, while the SMAs are also running closely, and the effective range is at $68.5-$74.5. Accordingly, buy lows and sell highs are recommended as WTI stays in this range, but WTI is weak in small cycles, showing a bearish trend at the beginning of this week. So, focus on the support at $68.5, and place long positions if this position is not broken (WTI will stay oscillating). Instead, WTI may plunge to $67 if this support is broken, while the further target will be $64.

Trading recommendations today: buy low and sell high. Try to go short with small positions when WTI rebounds to $70.3, with the stop-loss set near $71.3, and take profits when WTI reaches $68.5. Meanwhile, try to place a breakeven position after taking partial profits and set the secondary target at $73.2.

Trading Recommendations

Trading direction: Long

Entry price: 68.800

Target price: 73.200

Stop loss: 67.000

Support: 68.500/67.000

Resistance: 70.300/72.300