Diminishing Capital-Sensitive Performance
Translation:
Since May, the international crude oil market has been unpredictable. WTI crude oil prices have dropped from around $78.00 per barrel to $63.64 per barrel, and then rebounded to $70 per barrel. However, they are still under pressure.
Fundamentals
Amid macro-level uncertainties and filling gaps, the crude oil market experienced a volatile period since May. WTI crude oil prices declined from around $78.00 per barrel to $63.64 per barrel, followed by a rebound to $70 per barrel. However, the market still faces pressure and remains sensitive to various factors.
Recent news regarding the US replenishing its strategic crude oil reserves and the potential ban on Russian gas imports by the G7 provided some support for WTI crude oil. These developments could lead to a decrease in global crude supply, which may help stabilize prices.
The upcoming EIA and API inventory reports are expected to impact crude oil volatility during the middle of the week, particularly if traders anticipate inventories to decline after the unexpected increase. However, another significant rise could indicate weaker demand conditions and contribute to further price declines.
The release of the US retail sales report later today could also bring significant volatility to commodities. Consumer spending trends could influence expectations regarding the Federal Reserve's monetary policy, potentially impacting crude oil prices. Pessimistic data could reinforce expectations of a pause in interest rate hikes, leading to a weakening US dollar and potentially driving up riskier assets like crude oil.
If market expectations regarding US debt default risks continue to weaken this week, it may contribute to a restorative rally in oil prices in the short term. However, failure to effectively manage debt risks could result in significant declines across various asset classes.
Overall, in an environment of heightened market risk aversion, positive factors related to crude oil's supply and demand dynamics may falter, and oil prices could face further short-term downward pressure. In the long term, the crude oil market is anticipated to experience supply shortages in the third quarter, and there are no clear signals of contracting oil demand on the supply and demand side. However, demand is still in the process of seasonal pickup.
WTI crude oil currently exhibits bearish momentum, and prices are likely to continue searching for support at the first level of $69.33. This level has proven to be significant in the past. If this support holds, it could trigger a price rebound.
However, if prices continue to decline below this level, they could further drop towards the second support level at $67.56, which represents a multi-band low support level.
On the upside, the first resistance level is at $73.97, coinciding with the 38.20% Fibonacci retracement. This level may pose a challenge to any bullish momentum. If prices reach this level and fail to break through, a reversal towards the support level could occur.
The second resistance level at $76.91 represents another overlapping resistance level aligned with the 61.80% Fibonacci retracement. This level could be a significant obstacle to bullish price movements, potentially leading to a decline in prices.
Between these levels, there is an intermediate resistance level at $71.73, which also aligns with the 61.80% Fibonacci retracement. This level could serve as a secondary obstacle to higher prices.
Technical Analysis
WTI crude oil remains in a corrective mode as the price failed to extend its rally from the previous support area around $69.39 to $71.75 (which is close to the 61.8% Fibonacci retracement level that could potentially limit further upside). This indicates ongoing weakness in upward momentum. In such a scenario, the price could continue to retreat to $70.00 or even lower levels of consolidation.
However, technical indicators still point to more upside potential. On one hand, the 100 SMA (Simple Moving Average) remains above the 200 SMA, suggesting the path of least resistance is to the upside. A breakout above the areas of interest could trigger a test of the recent high around $73.43 or resistance near $74.00.
On the other hand, the stochastic indicator is trending downward, but the oscillator appears to be rising, indicating that bullish pressure may soon return. At the same time, the RSI (Relative Strength Index) is trending higher, suggesting that the bulls might gain the upper hand and drive prices higher.
Overall, while the short-term trend remains bearish, the capital-sensitive performance is expected to gradually diminish over time, potentially paving the way for a resurgence of the bullish sentiment. In terms of trading strategy, buying on dips would be the preferred approach.
USOILSPOT
Trading Recommendation
Trading Direction: Long
Entry Point: $70.00
Target Point: $75.50
Stop Loss: $67.40
Validity: Until May 30, 2022, 23:55:00
Support Levels: $70.53, $69.39, $67.55
Resistance Levels: $71.81, $72.59, $73.81
Since May, the international crude oil market has been unpredictable. WTI crude oil prices have dropped from around $78.00 per barrel to $63.64 per barrel, and then rebounded to $70 per barrel. However, they are still under pressure.
Fundamentals
Amid macro-level uncertainties and filling gaps, the crude oil market experienced a volatile period since May. WTI crude oil prices declined from around $78.00 per barrel to $63.64 per barrel, followed by a rebound to $70 per barrel. However, the market still faces pressure and remains sensitive to various factors.
Recent news regarding the US replenishing its strategic crude oil reserves and the potential ban on Russian gas imports by the G7 provided some support for WTI crude oil. These developments could lead to a decrease in global crude supply, which may help stabilize prices.
The upcoming EIA and API inventory reports are expected to impact crude oil volatility during the middle of the week, particularly if traders anticipate inventories to decline after the unexpected increase. However, another significant rise could indicate weaker demand conditions and contribute to further price declines.
The release of the US retail sales report later today could also bring significant volatility to commodities. Consumer spending trends could influence expectations regarding the Federal Reserve's monetary policy, potentially impacting crude oil prices. Pessimistic data could reinforce expectations of a pause in interest rate hikes, leading to a weakening US dollar and potentially driving up riskier assets like crude oil.
If market expectations regarding US debt default risks continue to weaken this week, it may contribute to a restorative rally in oil prices in the short term. However, failure to effectively manage debt risks could result in significant declines across various asset classes.
Overall, in an environment of heightened market risk aversion, positive factors related to crude oil's supply and demand dynamics may falter, and oil prices could face further short-term downward pressure. In the long term, the crude oil market is anticipated to experience supply shortages in the third quarter, and there are no clear signals of contracting oil demand on the supply and demand side. However, demand is still in the process of seasonal pickup.
WTI crude oil currently exhibits bearish momentum, and prices are likely to continue searching for support at the first level of $69.33. This level has proven to be significant in the past. If this support holds, it could trigger a price rebound.
However, if prices continue to decline below this level, they could further drop towards the second support level at $67.56, which represents a multi-band low support level.
On the upside, the first resistance level is at $73.97, coinciding with the 38.20% Fibonacci retracement. This level may pose a challenge to any bullish momentum. If prices reach this level and fail to break through, a reversal towards the support level could occur.
The second resistance level at $76.91 represents another overlapping resistance level aligned with the 61.80% Fibonacci retracement. This level could be a significant obstacle to bullish price movements, potentially leading to a decline in prices.
Between these levels, there is an intermediate resistance level at $71.73, which also aligns with the 61.80% Fibonacci retracement. This level could serve as a secondary obstacle to higher prices.
Technical Analysis
WTI crude oil remains in a corrective mode as the price failed to extend its rally from the previous support area around $69.39 to $71.75 (which is close to the 61.8% Fibonacci retracement level that could potentially limit further upside). This indicates ongoing weakness in upward momentum. In such a scenario, the price could continue to retreat to $70.00 or even lower levels of consolidation.
However, technical indicators still point to more upside potential. On one hand, the 100 SMA (Simple Moving Average) remains above the 200 SMA, suggesting the path of least resistance is to the upside. A breakout above the areas of interest could trigger a test of the recent high around $73.43 or resistance near $74.00.
On the other hand, the stochastic indicator is trending downward, but the oscillator appears to be rising, indicating that bullish pressure may soon return. At the same time, the RSI (Relative Strength Index) is trending higher, suggesting that the bulls might gain the upper hand and drive prices higher.
Overall, while the short-term trend remains bearish, the capital-sensitive performance is expected to gradually diminish over time, potentially paving the way for a resurgence of the bullish sentiment. In terms of trading strategy, buying on dips would be the preferred approach.
USOILSPOT
Trading Recommendation
Trading Direction: Long
Entry Point: $70.00
Target Point: $75.50
Stop Loss: $67.40
Validity: Until May 30, 2022, 23:55:00
Support Levels: $70.53, $69.39, $67.55
Resistance Levels: $71.81, $72.59, $73.81