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Fundamentals

During the Asian session on Monday (July 3rd), WTI crude oil fluctuated in a narrow range and is currently trading around $70.6/barrel. US crude oil continued to rise yesterday, achieving 3 consecutive white bodies. The main factors for the rise were that US crude inventories fell more than expected, as well as expectations of lower global supply, which made the increase in oil prices repair the decline previously triggered by concerns about falling demand. As it is now entering July, the bulls possess a slight advantage. The main reason is the official arrival of the consumption season, and the reduction in supply has gradually begun to materialize. However, opportunities for the bears lie in the inflation resilience and rising fears of raising interest rates under the expected management of the Fed and the ECB. As it has entered July, the results of the interest rate hike will be released soon. This week's data is extremely critical, especially the non-farm payrolls! Traders should ensure flexibility in their positions.

Inventory: US crude production was flat MoM at 12.2 million b/d in the week ended June 23rd. Crude imports rose 420,000 b/d MoM to 6.58 million b/d. Crude exports rose 800,000 b/d MoM to 5.338 million b/d. Net crude imports fell 380,000 b/d MoM to 1.242 million b/d. The number of rigs in use in US oil fell by one MoM to 545 in the week ended June 25th.

As July 4th is the anniversary of the US Independence Day, the US stock market is closed early. Trading will be subject to some restrictions this trading day. However, the US ISM manufacturing PMI data for June will be released within the day, which traders still need to focus on. In addition, the final value of the June manufacturing PMI data of European and American countries be paid attention to as well.

Technical Analysis

Trading at the daily timeframe, US oil continued to rebound after bottoming out at 67.2 at the beginning of last week and closed with the white body for three consecutive days in the second half of the week. The overall state of the daily chart is still biased to oscillation, which is amplified somehow. Currently, although US oil is expected to gradually strengthen technically, the actual upward momentum of the market is still limited. It is difficult to have a large unilateral smooth market. At the same time, as the daily chart formed three consecutive white bodies at the low, the bulls should develop at least to the upper Bollinger band high of 72.5 on the daily level. As for whether an effective break can be made, it depends on the specific changes in oil prices. Support for the week is at 69.5, 68.5, and 67.5, while topside resistance is focused on 72.5,74. Traders should still wait patiently for oil prices to retreat this week and focus on going long.

Traders are recommended to go long at lows rather than blindly chase the rally within the day! It is wise to wait patiently for oil prices to fall into place. If the oil price drops back to the 69.5 line again, traders can try long lightly, with the stop loss set at 68.5. The first target of taking profit looks at 71.5, and look at the second target of 72.5 after setting positions to break even.

Trading Recommendations

Trading Direction: Long

Entry Price: 69.500

Target Price: 72.500

Stop Loss: 68.200

Support: 68.500/67.500

Resistance: 70.500/72.500