US Oil Strategy - Supply Surplus Issue Unresolved, Oil Prices Continue to Decline

Fundamental Analysis:
Last week, the OPEC production cut agreement exceed market expectations in intensity and duration, which should reduce oil supply and positively impact oil prices. However, after the news broke, oil prices only saw a brief rebound. The primary reason lies in the anticipation of Trump’s upcoming presidency. Concerns include whether the trade conflicts might impact economic growth, his efforts to use low oil prices to curb inflation threats, and incentives to release oil to facilitate a Middle East ceasefire. These factors have led the market to expect that, even with the production cut agreement, the oil market will remain oversupplied in 2025, causing oil prices to continue their downward trend.

Technical Analysis:
On the US oil hourly chart, the rebound lows are getting lower, and recent lows have been broken, indicating a bearish trend. If the rebound resistance fails, the downtrend is expected to continue. Therefore, it is recommended to short lightly at the resistance level of 67.60, with a target of 65.70 and a stop loss at 68.30.

Trading Recommendation:
Short lightly at the resistance level of 67.60, with a target of 65.70 and a stop loss at 68.30.

Support Level: 65.70 Resistance Level: 67.60