Oil prices drop will encourage those willing to benefit from the rebound

WTI oil lost another 4.6% in price yesterday. Since the beginning of this week, it has already fallen by almost 11%. As a result, WTI oil is now trading below $70 per barrel for the first time since December 2021. At the same time, the end of the trading session on Wednesday wasn’t as pessimistic as its beginning: almost half of the day's drawdown was bought back. No wonder that the rapid price crash attracted those willing to play on the rebound.

While market participants were trying to process the consequences of the American SVB bankruptcy, new banking issues emerged in Europe. The annual report published by Credit Suisse Bank showed significant problems in its business operations. However, Credit Suisse's largest shareholder, the National Bank of Saudi Arabia, refused to provide additional financial aid to save the Swiss bank.

Finally, the Swiss National Bank intervened and pledged to provide Credit Suisse with up to $54 billion. The memory of the 2008 crisis forces financial regulators to respond to banking problems as quickly as possible, so they don't cause panic and mass withdrawals among the banks' clients.

At the same time, the drop in oil prices may soon cause a response from OPEC members. Earlier this week, Saudi Arabia's energy minister announced a possibility of further cuts in oil production. Although these comments were a response to possible NOPEС bill passage in the USA, there is no doubt that OPEC countries and their allies won't stand aside, and instead will try to support oil prices.

The most important goal for oil bulls now will be the return of WTI prices to the level of December 2022 local lows, which is $70.

Consider the following trading strategy option: 

Buy WTI oil in the 67.5-68 range. Take profit – 70. Stop loss – 66,5.

Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion.