Weakness Hard to Change in Short Term, Short in Short Term & Long in Long Term

Commodity

Summary:

The crisis has been eased and the oil price has rallied. But it is difficult to change the weakness in the short term, so the strategy is to go short in the short term and go long in the long term.

SELL WTI

Close Time

CLOSED

70.000

Entry Price

65.500

72.500

59.998 +0.189 +0.32%

55.8

Pips

Profit

65.500

69.442

Exit Price

70.000

Entry Price

72.500

Fundamentals

Macro side: the European and US banking credit crises ease in the short term; risk aversion improves dramatically, and financial markets rally greatly.

Institutional voices: Goldman Sachs believes that there is a real risk of financial (crisis) contagion, but currently believes that there will be no crisis contagion in the physical commodity market. The banking crisis is likely to have a greater impact on oil supply than demand. The oil market is expected to enter a shortage in June, and we think investors will return to commodities. The oil price will increase by $5-$10/barrel and confidence in the commodity super-cycle will become stronger.

Inventories: According to U.S. API inventory data, crude oil is slightly accumulated and refined products are depleted. U.S. API crude oil inventories increased by 3.262 million barrels in the week of March 16, versus an expected decrease of 1.448 million barrels and a previous increase of 1.155 million barrels. U.S. API Cushing crude oil inventories decreased by 760,000 barrels in the week of March 16, compared to a decrease of 946,000 barrels in the previous value. U.S. API gasoline stocks decreased by 1.09 million barrels in the week of March 16, versus a decrease of 4.587 million barrels in the previous value. API distillate stocks dropped by 1.84 million barrels in the week of March 16, compared with an increase of 2.886 million barrels.

Demand: WTI crude futures fell below $70 a barrel last week for the first time since December 2021, which could spur the U.S. government to start replenishing its strategic oil reserves, thereby boosting demand.

Supply: Russian production cuts are extended until the end of June. Russian Deputy Prime Minister Alexander Novak said Russia is close to achieving its promised 500,000 bpd production cut target and has decided to keep oil production at a lower level until July this year given the current market situation.

Overall, it is mainly the macro side that is dominating the oil market volatility in the near future. After the previous round of decline, the crude oil price rallies after the macro risk aversion has been repaired in the short term, and it is prone to an over-expected rally in the short term. In terms of fundamentals, high-frequency indicators have been turning weak recently, and crude oil inventories continue to pick up with limited favorable. The market focus should be on the late night tonight and early tomorrow morning Fed meeting, which is currently considered not very likely to produce more than expected favorable news. The current strategy can be going short in the short term and going long in the long term.

Technical Analysis

In the daily chart, after nearly 2 weeks of sharp decline, the price has entered a weak consolidation; before breaking through 70 in one move, the price is still weak. Although the MACD forms a death cross and its opening expands and it appears to be weaker in the short term, it is gradually approaching the oversold area and an oscillation retracement of picking up will occur at any time after the dip; the space below will not be too large, and there is a very strong support near 65. In the short term, the pattern of oscillation may be difficult to change, and aggressive traders are recommended to buy low and sell high in the 65-70 range. WTI: Weakness Hard to Change in Short Term, Short in Short Term & Long in Long Term_1

WTI: Weakness Hard to Change in Short Term, Short in Short Term & Long in Long Term_1

Trading Recommendations

Trading direction: Short

Entry price: 70.000

Target price: 65.500

Stop loss: 72.500

Support: 68.500/65.500

Resistance: 70.000/72.500

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data