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Fundamentals

During the Asian session on Friday (June 9), WTI crude oil fell slightly, currently trading around $70.80 / barrel. Yesterday overnight British media outlet "Middle East Eye" reported that the US and Iran are close to reaching an interim agreement. Iran will limit its uranium enrichment activities in exchange for 1 million b/d of oil exports and access to its frozen overseas funds. Crude oil futures plunged Immediately, and WTI fell as low as $69 per barrel. After the White House refuted the rumors, the decline in oil prices narrowed, but it was still more than $2 per barrel from the intraday high, erasing the effect of Saudi Arabia's production cuts. The main thing is that the Saudi side has not yet responded to this, perhaps it may not be groundless. Investors need to prevent the worst outcome of the oil market, reduce risk exposure, and focus on rolling longs. It is safer to rely on the 70 level to go long, reduce the stop loss, and expand the P/L ratio appropriately.

Inventories: EIA US commercial crude inventories fell by 451,000 barrels to 459 million barrels in the week ended June 2, compared with an expected increase of 1.022 million barrels versus an increase of 4.489 million barrels in the previous month. API crude inventories fell by 1.71 million barrels to 491 million barrels, compared with an increase of 5.202 million barrels in the previous month. EIA and API commercial crude inventories fell slightly this week.

Data: The number of initial jobless claims in the US for the week ended June 3 was 261,000, higher than the expected value of 23.5 and the previous value of 23.2. The final monthly rate of wholesale inventories in the US in April was -0.1%, higher than the expected value and the previous value of -0.2%. Generally, US data is bearish, with bearish for the US dollar and bullish for crude oil.

Overall: In the context of the continuous upward revision of global oil consumption expectations, the reason for the continuous decline in crude oil prices in the international market is mainly due to pessimistic macro expectations. However, it may not be wise to take the macro pessimism of expectations to limit the immediate entry into a tight supply-demand balance. Therefore, the market may be overly pessimistic at the moment. Recently, the supply of the global oil market has begun to show some signs of tightening, while the demand side maintains the momentum and pace of recovery. It suggests that the international crude oil market will enter a new stage of gradual destocking, which is likely to lead to a gap between supply and demand in the second half of the year. Oil prices will remain oscillating in the short term, but the general bullish view of crude oil remains unchanged.

Technical Analysis

Trading at the daily timeframe, oil prices are in a wide range of oscillations, with disordered moving averages and disorganized technical signal indicators. Currently, oil prices are still maintaining a volatile upward trend overall, and the market needs to look for the opportunity to go long to the 70 line in the short term. The upper focus is on whether the resistance level of 74.5 can be broken. The invalid break will cause oil prices to keep fluctuating widely with a high probability.

It is still not recommended for investors to go short during the day, long positions can be taken after the rally of WTI. It is appropriate to expand the profit-loss ratio. Aggressive traders can try long positions lightly in the 70-70.5 range, with stops set at the 69.5 line. If prices lift to the 73.3 line, then try to take profit partially and set the remaining position to break even.

Trading Recommendations

Trading Direction: Long

Entry Price: 70.500

Target Price: 74.500

Stop Loss: 67.500

Support: 70.000/67.000

Resistance: 73.300/74.800