BUY: Enter, target 49.88 (+8.36%), stop 43 (-6.52%), risk award 1.28x, tenor: 1 month
Last traded price: 46.03
Oil prices posted strong gains last week, recorded with a 9% jump from 42.23 to 46.03, mainly due to the profit taking close from short bets. The dip in U.S. production is also providing a helping hand to buoy the oil prices.
Since the beginning of the year, OPEC countries have collectively implemented their cut promise. Despite, some members have been less than fully diligent, like Iraq who has achieved a compliance rate of only 55% so far this year, there are reasons for the bullish bounce retains in near term.
Firstly, Crude oil demand remain high, According to the Organization of the Petroleum Exporting Counties, the world oil demand is anticipated to grow gradually by 1.3 mb/d to average around 94.15 mb/d due to the cheap oil price.
We can see the statement backed by some auto sales data. Let’s say the global car sales posted a solid advance, climbing up 12.1 percent to 1.5 million units since start of the year.
More importantly, the WTI experienced a 17% slump last month and likely enter a technical retracement before any of the next big movement as speculators closing out their short bet.
^Note that technically oil is still remaining in its downward channel with the next key resistance at $ 48, the structural bears are still beating up the cyclical bulls. Cautious capital control is recommended.