United States Oil (USO) – Trump, Putin agree to talks on energy market stabilization

United States Oil (USO) – Trump, Putin agree to talks on energy market stabilization

Oil prices firmed on Tuesday after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks aimed at stabilizing energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

Brent crude was up by 61 cents, or 2.7%, at $23.37 a barrel by 0833 GMT, after closing on Monday at $22.76, its lowest finish since November 2002. 

U.S. crude was up by $1.04, or 5.2%, at $21.13 a barrel, after settling in the previous session at $20.09, its lowest since February 2002. 

Oil markets have faced a double whammy from the coronavirus outbreak and a race to win market share between Saudi Arabia and Russia after OPEC and other producers failed to agree on deeper cuts to support oil prices in early March. 

Trump and Putin agreed during a phone call to have their top energy officials discuss stabilizing oil markets, the Kremlin said on Monday. 

Although the futures market is seeing a recovery, physical cargoes are selling in some regions at single digits, with sellers offering hefty discounts. 

With a plunge in prices that has knocked about 60% off oil prices this year, a commissioner with the Texas state energy regulator renewed a call for restrictions on crude production because of the national supply glut.

In a sign of how well the market is supplied, the front-month Brent futures contract for May is trading at a discount of $13.95 per barrel to the November contract, the widest contango spread ever seen.

A contango market implies traders expect oil to be higher in the future, encouraging them to store oil now to sell later.

Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, plans to boost its oil exports to 10.6 million barrels per day (bpd) from May on lower domestic consumption, a Saudi Energy Ministry official said.

Global oil refiners, meanwhile, have cut their throughput because of the slump in demand for transportation fuel, with European refineries slashing output by at least 1.3 million barrels per day (bpd), sources told Reuters.

Exxon Mobil Corp closed a small crude distillation unit at its 502,500 bpd Baton Rouge refinery in Louisiana due to low demand, sources said.

Chief economist for global commodities trader Trafigura said oil demand could fall in the coming weeks by as much as 30% from consumption at the end of last year.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 8.25.

The projected upper bound is: 5.40.

The projected lower bound is: 2.73.

The projected closing price is: 4.07.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 20 white candles and 29 black candles for a net of 9 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 14 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

An on-neck line occurred. This is a bearish pattern where prices should move lower when the white candlestick’s (i.e., the most recent) low is penetrated.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 22.9946. This is not an overbought or oversold reading. The last signal was a buy 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 23.17. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 20 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -104.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 0 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.240 at 4.230. Volume was 98% below average (consolidating) and Bollinger Bands were 191% wider than normal.

Open     High      Low     Close     Volume___
4.210 4.280 4.030 4.230 645,046
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 4.92 9.08 11.17
Volatility: 153 122 72
Volume: 104,091,184 53,907,624 32,535,840

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.

Summary

UNTD ST OIL FUND gapped down today (bearish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 62.1% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 52 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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