Trading position (short-term; our opinion; levels for crude oil’s continuous futures contract): long position with possible entry around $65.15-67.61, with $65.00 as a stop-loss and $71.00 as a price target.

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Following up on Paul Rejczak taking the wheel behind the Stock Trading Alerts, I’m pleased to announce Sebastien Bischeri as the author of the Oil Trading Alerts. Sebastien brings with him a wealth of experience from various corners of the financial world. Will oil prices bounce back? Will demand recover? Which ETFs are worth it? Sebastian will provide you with context, because that’s what you come to us for – in order to understand why the news is the way it is.  

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Dominik Starosz
Managing Editor

After a rise in the early session, crude oil prices have slid back to a potential support zone. Will we resume the uptrend?

Washington will call on OPEC+ to boost production in order to mitigate climbing gasoline prices. Thus, crude oil futures (continuous contract) could likely find a rebounding floor in the area around $65.15 (previous low level) and $67.61, as highlighted by the yellow rectangle. Therefore, an entry could be initiated within that area with relatively low risk. Stop-loss level could be located just below the 20-July low at $65.01, and the initial target to aim at is $71 (previous support).

Fundamental context

We will be watching closely the monthly oil market reports from the IEA and OPEC on Thursday, looking for any signs of changes in their demand outlook after the weekly API report displayed another drop in US stocks.

Technical Analysis

The overall long-term trend remains bullish so far. The recent low didn’t break the July 20 daily swing low, and thus we are still in a long-term uptrend on a potential dip.

Given the recent slide which followed the news about the US seeking to slow down the rise of gasoline prices, we could expect one of two following scenarios:

• Optimistic scenario: the prices could find some support in the $65.15-67.61 area (yellow rectangle) before either pausing (and accumulating) or finding support to rally towards the previous support level, which might become resistance at $71 (first target labeled as TP1). The latter might either trigger a retake of control by the sellers or create more buying pressure, which will break the $71 level and perhaps accelerate to aim a higher price level.
• Pessimistic scenario: a further slide, retest and move below the previous low could push the price down under the $65 support. This would begin a new downtrend.

Figure 1 - Brent (CL) Crude Oil Futures (Continuous contract)

In summary, oil prices are at the partings of two possible scenarios – the one most likely for now is the gradual resume of the current uptrend, as long as we see no invalidation.

As always, we’ll keep you, our subscribers well informed.

Trading position (short-term; our opinion; levels for crude oil’s continuous futures contract): long position with possible entry around $65.15-67.61, with $65.00 as a stop-loss and $71.00 as a price target.

Thank you.

Sebastien Bischeri
Oil Trading Strategist