Downtrend Channel Is Intact

Summary:

WTI Crude was supported as the American Petroleum Institute (API) reported a decline in U.S. oil inventories. Russia plans further production cuts to balance OPEC+ quotas.

SELL WTI

Close Time

CLOSED

81.314

Entry Price

76.600

83.500

86.721 -0.860 -0.98%

215.5

Pips

Profit

76.600

79.159

Exit Price

81.314

Entry Price

83.500

Fundamentals

Crude oil prices continued to retreat as expectations of production delays due to Hurricane Beryl caused gains. However, facilities along the Gulf of Mexico coast were not significantly damaged, supporting supply expectations.

Moreover, sources revealed that Russia plans to further cut oil production to offset output exceeding OPEC+ quotas for this year and next during warmer seasons. Additional production cuts from Moscow are most likely to be implemented in the summer and early autumn due to technical reasons, sources added.

Since cooperating with OPEC, Russia has consistently argued that it cannot significantly reduce production in late autumn and winter due to the geological and climatic conditions of its oil fields. It is expected that additional restrictions will be imposed in the West Siberian oil fields where production can be regulated.

The American Petroleum Institute (API) reported a decrease in U.S. crude oil inventories, and the upcoming data from the U.S. Energy Information Administration (EIA) may show a synchronized trend. A substantial decrease in inventories could drive up crude oil prices, while an increase would indicate a drop in demand or an increase in supply, potentially triggering selling.

Technical Analysis

Although WTI Crude prices found support during the day, they are still on a downtrend. In the 1H timeframe, lower highs and lower lows are connected by a descending channel. Currently, prices are bouncing back from the support level and may need to correct towards Fibonacci levels.

The 38.2% Fibonacci level is at US$81.54, while the 50% Fibonacci level is close to the key psychological level of US$82.00 and the top of the downtrend channel at US$82.70. The SMA is near the 61.8% Fibonacci level, at US$82.39.

Regarding the SMAs, the 100 SMA is below the 200 SMA, indicating the path of least resistance is downward, making selling more likely to sustain than reverse. If any Fibonacci retracement holds as resistance, crude oil prices could fall back to US$79.37 or lower lows.

Stochastics are rising but stalling in the middle of the range, suggesting some indecision on the part of the bulls. A turn lower could pave the way for a potential correction continuation.

Furthermore, the Relative Strength Index is also in the middle, suggesting crude oil may experience a consolidation as investors await more directional cues.

Trading Recommendations

Trading Direction: Sell

Entry Price: 81.50

Target Price: 76.60

Stop Loss: 83.50

Deadline: 2024-08 - 01 23:55:00

Support: 79.08, 77.85, 77.36

Resistance: 80.15, 81.69, 82.50

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