Oil Prices Not About to Recover

Oil Prices Not About to Recover

Oil Prices Not About to Recover


Saudi Arabia boosted its oil output to a record high in July of 10.67 million barrels-per-day (bpd), it told the Organization of the Petroleum Exporting Countries.

OPEC said in its monthly oil report citing secondary sources its crude output, including Gabon, rose to 46,000 bpd in July to 33.11 million bpd compared with June.

This comes as OPEC member Venezuela tries to drum up support for a producer meeting to decide measures that would buoy oil prices.

“Oil eased lower as another round of proposed production freeze talks by OPEC failed to excite investors,” ANZ Bank said.

When producers last held such talks in April, OPEC members failed to agree on any measures.

“Renewed attempts at verbal intervention by OPEC will help bolster oil market sentiment, although the group will struggle to rebuild its role as a backstop to Brent,” oil analysts at BMI Research said in a note to clients.

Traders said excess supplies of crude and refined fuel products weighed on markets, and a proposed meeting by oil producers was unlikely to result in significant market tightening.

The U.S. Energy Information Administration added to the market’s unease when on Tuesday it forecast a smaller decline in U.S. crude oil production in 2016 than it projected a month ago as drilling activity picks up.

The agency now expects U.S. oil output to fall by 700,000 barrels per day (bpd) this year to 8.73 million bpd, compared with the 820,000-bpd drop it previously forecast.

A global products glut that has led storage tanks from Houston to Singapore to reach near capacity is also weighing on oil prices, as analysts warn that only large-scale refinery run cuts can clear the excess.

UNTD ST OIL FUND closed down -0.030 at 10.070. Volume was 4% below average (neutral) and Bollinger Bands were 23% wider than normal.

Open High Low Close Volume___
10.190 10.240 10.010 10.070 25,742,420

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 9.76 11.05 10.89
Volatility: 41 44 53
Volume: 30,324,684 24,953,002 35,538,964

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.


UNTD ST OIL FUND is currently 7.5% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume out of USO (mildly bearish). Our trend forecasting oscillators are currently bearish on USO and have had this outlook for the last 37 periods.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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