In Wednesday's (September 14th) Asian session, WTI crude oil narrowly oscillated, and it is currently trading at $88.4/bbl. Overnight, the U.S. CPI soared as expected, highlighting the stubbornness of inflation. This increased the possibility of U.S. debt staying high for a long time, which may further drag down the economy, and accumulate greater risks. The current appreciation is based on the strong intervention from the supply side instead of the demand, and it is not a healthy upward drive. Now, no investment banks are claiming that the oil prices will rise to $100 soon. Even Saudi Arabia does not expect a too fast and excessive rise in crude oil because it could damage China's economic recovery, while the resulting rising inflation could lead to an aggressive interest rate hike in the U.S. again. Meanwhile, the global demand is difficult to withstand the hit again, and such a hit is a disaster for the current high crude oil price driven by production cuts. Therefore, investors should be cautious, and stop chasing the upward trend at the current phase. However, it is better to go long after a retracement, and try to enter a small position after WTI crude oil fails to ascend further.

Stock: EIA crude oil stocks (excluding the Strategic Petroleum Reserve) decreased by 2.057 million barrels or 0.5% to 394.1 million barrels. It is expected to decrease by 2.5 million barrels, while the previous number was 5.296 million barrels less. The stock change has declined for 5 consecutive weeks and the oil stock reached the lowest level since February 2015. For the Cushing region, crude oil gained 1.25 million barrels of stock, while the previous number was 1.242 million barrels less, showing a new (six-week) low in stock change since the week of August 3rd. In addition, Gasoline stocks decreased by 1.719 million barrels, and it was expected to decrease by 104,000 barrels, while the previous number was 1.25 million barrels more, indicating a new (six-week) low in stock change since the week of August 3rd. Furthermore, refined oil stocks increased by 839,000 barrels. It was expected to grow by 1.5 million barrels, while the previous number increased by 6.163 million barrels. Meanwhile, the refined oil inventory has been ascending for 3 consecutive weeks.

Focus: U.S. PPI data, the initial jobless claims, and the retail sales data for August.

Now, WTI crude oil extends the ascending pattern. It closed higher yesterday but the overbought and bearish divergence signals were valid. At present, the weakness of WTI crude oil emerges, and the stock plunged yesterday with little changes in the price but slightly declined. Moreover, it gained support once depreciated to 88, with the highest level reaching 89. So, investors need to be cautious that the bulls could take profits at highs and result in a significant retracement. Despite the appreciation not peaking, under a divergence pattern, investors can trade with a stop-loss with small positions at the top. Nonetheless, before WTI crude oil approaches to the key resistance range from 90 to 93, investors should wait for a significant retracement to go long, or go short when WTI crude oil ascends later.

Trading recommendations: Buy low and sell high. If WTI crude oil falls to 87,3, investors could go long with small positions shortly, and set the stop-loss at 86.8. To take profits, investors could set the first target at 88.9 and the second target at 90.0. However, if WTI stays below 88.5, investors could go short with small positions by setting the stop-loss at 89, and taking profits at 87.5.

Trading direction: Long

Entry price: 87.300

Target price: 90.000

Stop loss: 86.800

Support: 87.500/85.500

Resistance: 90.000/93.000