United States Oil (USO) Chinese buyers shy away from U.S. crude

United States Oil (USO) Chinese buyers shy away from U.S. crude

United States Oil (USO) Chinese buyers shy away from U.S. crude

Although the Chinese government has not yet gone so far in the ever-escalating trade war as to sanction United States oil, imports are drying up anyway as Chinese buyers shy away from U.S. crude. According to U.S. Census Bureau data released last week, for the first time since 2016, China has halted purchases of U.S. crude, importing zero barrels in August. A major blow coming from the second biggest economy in the world–a blow that is sure to have reverberating repercussions and retaliations.

After Washington lifted restrictions on exports at the end of 2015, China began buying vast quantities of U.S. crude, and has even been giving Canada a run for its money as the number one importer in some instances. Chinese imports represented 23 percent of total U.S. crude exports in 2017 and averaged 22 percent this year–until August. That is definitively no longer the case, as tensions have ramped up significantly in the past months after the Trump Administration began a “trade war” at the beginning of this year.

China is not the only country that is opposed to reinstating sanctions on Iran. Practically all major buyers of Iranian oil have opposed the cut-off. But few, if any, countries have the ability that China does to risk their relationship with the United States. China’s relationship with the Trump administration is already stressed, to put it lightly. They have far less to lose by siding with Iran and endangering the success of U.S. sanctions, adding fuel to the trade war fire.

Regardless of what is coming down the pike, the trade war with China is already having dire consequences. It remains to be seen just how it will impact the U.S. oil industry to lose a massive consumer like China at the drop of a dime, but we know that the impact will be considerable.

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 14.80.

The projected upper bound is: 15.61.

The projected lower bound is: 14.32.

The projected closing price is: 14.97.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 20 white candles and 27 black candles for a net of 7 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 4 falling windows in the last 50 candles–this makes the current falling window even more bearish.

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 15.1260. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 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 45.68. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 5 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 -125.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 5 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 sell 1 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.430 at 14.950. Volume was 49% above average (neutral) and Bollinger Bands were 17% wider than normal.

Open High Low Close Volume___
15.220 15.265 14.890 14.950 29,788,508

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 15.67 14.67 13.67
Volatility: 35 28 29
Volume: 23,035,632 18,429,228 19,951,034

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 normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 9.3% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of USO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 32 periods.

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