• Still unable to break the long term downtrend channel. After hitting YTD high of US$55.2 on 3 Jan, WTI plummeted 23.8% to a low of US$42 on 21 June in anticipation that strong supplies from US production and OPEC’s efforts to drain global inventories have taken longer than expected. Although WTI managed to stage a short term 20% relief rally from US$42 to a high of US$50.4 (31 July & 1 Aug), persistent concerns of uptick in U.S. production and OPEC’s rate of compliance with the global deal to curb production have capped any rebound beyond the US$50 psychological barrier.

• ST outlook remains negative despite snapping a 3-day losing streak. Crude futures settled US$0.30 higher to US$46.9 overnight, as traders mulled over data showing U.S. crude supplies fell the most in eleven-months while U.S. production rose to a more than two-year high.

• Following its recent 6.7% fall from US$50.4 and the violation of short term support trend line, WTI’s near term outlook has turned mildly negative with immediate support at $46.2 (50% FR) amid weakening technicals. A violation of $46.2 support will witness further retracement towards $45.2 (61.8% FR) and $43.8 (78.6% FR) zones. Key resistances are US$48.4 (23.6% FR) and US$50.4.

Source: Hong Leong Investment Bank Research - 18 Aug 2017