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Fundamentals

During the Asian session on Wednesday (July 12), WTI crude oil fluctuated in a narrow range, currently trading around $74.7/barrel. Oil prices surged yesterday, reaching as high as $74.9, which is mainly due to the weaker dollar and the increased expectation of global oil demand. Overnight, a number of Fed officials said the central bank may need further rate hiking to reduce inflation, while the current monetary policy tightening cycle is getting closer to the end. The speech has dragged down the dollar index, sending it to a two-month low of 101.37. At the same time, market participants have lowered expectations of the requirement for further increases in US interest rates. In addition, the latest monthly report of EIA predicts that global crude oil will be in short supply this year, which is contrary to previous forecasts. This also helped oil prices break through the upper edge of the oscillation range this year at 74.5.  

News: The EIA reported that a small decline in oil production from OPEC+ and non-OPEC+ countries will leave global supply below demand slightly. Global oil production is expected to increase to 101 million b/d in 2023 from 99.9 million b/d in 2022, which will reach 102.6 million b/d in 2024. Global demand will increase to 101.2 million b/d in 2023 from 99.4 million b/d in 2022, which will reach 102.8 million b/d in 2024.

Investors need to focus on the US PPI, CPI data, and crude oil inventory data tonight.

Technical Analysis

Trading at the daily timeframe, US oil first oscillated around the high between 73-74 yesterday, resulting in a wave of rallies in the evening. At the same time, the price tested the resistance of the 75 line at the high, which also met our expectations and broke through the previous oscillation upper line of 74.5, making the daily line finally close a large white body. The daily cycle is in line with the unilateral upward trend, with Bollinger pulling apart, the MACD gold cross widening, and the moving averages diverging. Meanwhile, oil prices have also stood on the MA5, MA10, and MA20, and the technical structure has gradually turned positive, expressing an obvious upward trend. Investors are able to trade referring to the one-sided moving average support point, which is temporarily displayed around 73.6 of MA5. In the short term, oil prices have signs of overbought, and if they cannot quickly go to another platform, prices will have space for oscillation and fallback in the Asia-Europe session. Therefore, investors can grasp the support point to go long around 73.6, and the 76.8 line can be observed in the short term of the day.  

It is recommended that investors are bullish rather than chasing long, long positions are allowed to take when the oil price is adjusted to retrace. The low support is around MA5 at 73.6, investors can wait for the oil price pullback to be confirmed again before going long. Besides, the upper high at 76.8 should keep watching as well.

Trading Recommendations

Trading Direction: Long

Entry Price: 73.600

Target Price: 76.800

Stop Loss: 72.500

Support: 73.600/72.500

Resistance: 75.600/76.800