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Fundamentals

During the Asian session on Tuesday (June 27th), WTI crude oil fluctuated in a narrow range, currently trading around $69.8 / barrel. US crude edged higher yesterday, mainly due to concerns that political instability in Russia could exacerbate supply disruptions. As July is approaching, the oil market is about to face several concerns about supply. For one thing, Saudi Arabia has pledged to cut production from July, which will create a supply gap in the market. For another, US production is declining as well. At the same time, the release of the US Strategic Reserve (SPR) is coming to an end, which may usher in the replenishment operation. Finally, political instability in Russia could exacerbate supply shortages in the coming months.

Data: US energy companies have seen an eighth consecutive week of declines in active oil and gas rigs for the first time since July 2020, which is an early gauge of future US supply.

Today's data to watch include API crude oil inventory data, US preliminary durable goods orders for May, US annualized total for May seasonally adjusted new home sales, US Chamber of Commerce Consumer Confidence Index for June, and Canadian CPI data for May. Besides, important events to watch include ECB President Christine Lagarde's speech at the ECB's annual forum and the 14th Summer Davos Forum, which runs until June 29.

Technical Analysis

Trading at the daily timeframe, the moving averages are still sticky. The MA5 also began to cross the MA10 and the MA20 around 70.4, but it was unable to go wide. The directionality was not strong, which was still dominated by oscillations. US crude oil opened slightly higher to 70.2 in early trading, suppressed by moving averages, and fluctuated in a narrow range, which is currently trading around 69.8. According to the trend at the beginning of the week, crude oil is expected to remain volatile. Before the opening of the moving average, it can hardly express a large smooth market. Oil prices will still fluctuate within the range of 68.5-70.5. If it can effectively break through the upper edge of the 70.5 line, the oscillating platform may be able to rise to 70.5-74, with the center at the 72.3 line. Technically speaking at present, it will have to test the support around 67.3 to break below 68.5. However, oil prices are lack of impetus to break through the 67 line downwards for now.

It is suggested that traders buy low and sell high during the day, rather than chase up or down. Traders can take short positions until oil prices rebound to around 70.5. The stop loss should be set around 71.5, and the first target of take profit is at the 69.5 line. Then, looking at the second target 68.5 line after setting positions to break even. Later, traders can wait for the opportunity to go long, when oil prices fall back to around 68.5. The stop loss should be set at 67.5, and the first target of the take profit is 69.5. Look at the second target 70.5 line after setting positions to break even.

Trading Recommendations

Trading Direction: Short

Entry Price: 70.500

Target Price: 68.500

Stop Loss: 71.500

Support: 68.500/67.300

Resistance: 70.500/72.500