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WTI CRUDE OIL: CORRECTION DUE TO FEARS OF A POSSIBLE DECREASE IN OIL DEMAND FROM CHINA

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WTI CRUDE OIL: CORRECTION DUE TO FEARS OF A POSSIBLE DECREASE IN OIL DEMAND FROM CHINA
Scenario
TimeframeWeekly
RecommendationSELL STOP
Entry Point72.30
Take Profit68.90
Stop Loss74.00
Key Levels68.90, 72.30, 73.90, 76.80
Alternative scenario
RecommendationBUY STOP
Entry Point73.95
Take Profit76.80
Stop Loss73.00
Key Levels68.90, 72.30, 73.90, 76.80

Current trend

The price of North American light crude oil WTI Crude Oil is correcting in a downward trend at 73.03, and one of the main reasons for the strengthening of the negative dynamics, experts say, is the increased fears of investors regarding a possible decrease in demand for energy resources from China, the world’s largest oil importer.

According to the report of the General Administration of Customs of the People’s Republic of China, gasoline exports in July amounted to 790.0K tons or 5.77M barrels per day, falling by 35.7% compared to 1.22M tons in the same period a year earlier. It is largely due to a drop in the profitability of oil refineries, which reduced oil processing. From January to July, production volume slowed by 1.2% to 419.15M tons, and to restore the figures, China plans to introduce additional export quotas, which are still at the approval stage.

Today at 22:30 (GMT 2), the American Petroleum Institute (API) may report a slight increase in black gold reserves by 0.500M barrels compared to –5.205M barrels earlier. In turn, the correction by 1.357M barrels, recorded by the Energy Information Administration of the US Department of Energy (EIA), was the first in six weeks of consecutive decline. This time, analysts do not expect a strengthening of the negative trend.

As for demand, according to the Chicago Mercantile Exchange (CME), the average trading volume of crude oil over the past sessions was 978.0K contracts, which is slightly lower than the average value of 1.1M the week before and puts local pressure on oil prices.

Support and resistance

On the daily chart, the price is falling within the downward channel of 82.00–70.00.

Technical indicators are reinforcing the sell signal: fast EMA on the Alligator indicator are below the signal line and are expanding the range of fluctuations, and the AO oscillator histogram is forming new correction bars, again falling into the sell zone.

Support levels: 72.30, 68.90.

Resistance levels: 73.90, 76.80.

WTI CRUDE OIL: CORRECTION DUE TO FEARS OF A POSSIBLE DECREASE IN OIL DEMAND FROM CHINA

Trading tips

Short positions may be opened after the price consolidates below the support level of 72.30, with the target at 68.90. Stop loss — 74.00. Implementation period: 7 days or more.

Long positions may be opened after the price consolidates above the resistance level of 73.90, with the target at 76.80. Stop loss — 73.00.


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