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Fundamentals

During the Asian session on Thursday (July 13), WTI crude oil fluctuated in a narrow range, currently trading around $75.7/barrel. Oil prices oscillated sharply yesterday, which is mainly due to expectations that the Fed will reduce the number of further rate hikes. Data released by the US Department of Labor showed an overall decline in the US price growth, with the YoY CPI increase in June falling to its lowest level since March 2021. The US CPI rose 3% YoY and 0.2% MoM in June, compared to 4% YoY and 0.1% MoM in May. The June core CPI rose 4.8%YoY, excluding volatile food and energy prices. After the CPI data, bullish sentiment deepened, as the data hinted that the Fed's interest rate hike cycle may be nearing its end, while the market believes that the Fed will raise interest rates once more this year. However, the reported rise in crude oil inventories and the slight weakness in oil prices are more unfavorable for high-level oil prices. Oil prices will be driven back unless it can forge ahead, or it may have a demand for a correction. However, since oil prices have already identified an upward trend, the range of the correction will be relatively limited, and the previous resistance at 74.5 will reverse to support.

Inventory: U.S. crude inventories rose by 5.946 million barrels for the week to July 7, with the expected 483,000 barrels and the previous -1.508 million barrels. Inventories of Cushing, Oklahoma, and crude were -1.605 million barrels, with the previous -400,000 barrels. Strategic Petroleum Reserve (SPR) inventories fell by 401,000 barrels, or 0.12%, to 346.8 million barrels. Gasoline inventories -04,000 barrels with the expected -727,000 barrels and the previous -2,549,000 barrels. Refined oil inventories were 4.815 million barrels, with the expected -262,000 barrels and the previous -1.045 million barrels. US domestic crude oil production fell by 100,000 b/d to 12.300 million b/d in the week of July 07. Excluding commercial crude from strategic reserves, imports were 5.88 million b/d, down 1.158 million b/d from the previous week. US crude exports fell by 1.757 million b/d to 2.144 million b/d. US crude oil exports in the week ending July 7 were the lowest since the week of January 6, 2023. Strategic Petroleum Reserve inventories were the lowest since the week of August 19, 1983.

Data: The US CPI (Consumer Price Index) rose 0.2% MoM in June, lower than the expected 0.3%. CPI rose 3.0% YoY, significantly below the previous reading of 4.0% and slightly below expectations of 3.1%. The performance of the Core CPI was also lower than expected, which rose 0.2% MoM, below the expected 0.3% and the previous 0.4%. Besides, Core CPI rose 4.8% YoY, below the expected 5.0% and the previous 5.3%.

Investors should focus on US PPI data for June and the change of US jobless claims, as well as crude oil inventories tonight.

Technical Analysis

Trading at the daily timeframe, US oil first oscillated in a narrow range above the 75 line yesterday. After the release of the US CPI data in the evening, the US oil trend also showed a wave of the rally, once breaking through the 76 line of resistance. Although the subsequent EIA crude oil inventory data brought a certain bear market signal, US oil did not launch a sharp retracement, which oscillated basically at a relatively high level between 75 and 76. Therefore, it indicated that the market is more inclined to sentiment-led large-cycle trend expectations. The obvious rise in oil prices does not need to be emphasized again, with several patterns kept intact including the wider MACD golden cross, divergent moving averages, and the price stance firmly above MA5, MA10, and MA20. For the intraday market, investors need to wait for oil prices falling back to the support point before making long transactions or participating in the pullback with small positions.

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 74.5, investors can wait for the oil price pullback to be confirmed again before going long. Besides, the upper high target at 76.8 should keep watching as well.

Trading Recommendations

Trading Direction: Long

Entry Price: 74.500

Target Price: 76.800

Stop Loss: 73.600

Support: 74.500/73.600

Resistance: 75.800/76.800