United States Oil (USO) concerns surrounding energy demand lingers

United States Oil (USO) concerns surrounding energy demand lingers

United States Oil (USO) concerns surrounding energy demand lingers

Oil futures diverged Monday, with U.S. prices up a third straight session while global benchmark Brent finished lower, as tensions with Iran, and the possibility of disruptions to oil flow in the Middle East, increased. Concerns surrounding energy demand, however, lingered.

Geopolitical tensions with Iran have heated up, while oil demand expectations seem to be coming down, said Phil Flynn, senior market analyst at Price Futures Group.

August West Texas Intermediate crude CLQ19, -0.40% edged up by 15 cents, or 0.3%, to settle at $57.66 a barrel on the New York Mercantile Exchange, posting a gain for a third consecutive session. The contract lost 1.6% for last week, according to Dow Jones Market data.

International benchmark September Brent BRNU19, -0.45% lost 12 cents, or 0.2%, to $64.11 a barrel on ICE Futures Europe. Brent declined 0.8% for last week.

Iran is claiming that it is enriching uranium above the levels agreed to in the Iran nuclear deal, said Flynn, in daily commentary. “They are also threatening retaliation for the U.K. taking an Iranian oil tanker [last week]. They have threatened to seize U.K. ships and turn the Persian Gulf into a sea of blood.”

Iran’s Foreign Ministry spokesman Abbas Mousavi called the seizure of the Iranian supertanker “piracy,” but stopped short of suggesting Iran take actions against ships transiting through the Strait of Hormuz, the Associated Press reported Monday. The Strait is the world’s most sensitive oil-transportation choke point.

“Iran’s violation of the [nuclear] agreement could now prompt Europe to impose sanctions on Iran, too. For example, the EU could impose an oil embargo on Iran, as it did between 2012 and 2015,” said Carsten Fritsch, energy analyst with Commerzbank. “This would have no direct impact on Iranian oil exports as Europeans have in any case not bought any Iranian oil since the end of 2018 because of the U.S. sanctions; this is presumably one reason for Iran’s dissatisfaction and for the aforementioned ultimatum.”

“Indirectly, however, Iranian oil shipments could certainly be hampered by new EU sanctions given that these would no doubt apply also to the banking and insurance sector,” he added. “In this case, the remaining buyers of Iranian oil would find it even more difficult to transact and insure their purchases — after all, most of the insurance companies active in the shipping sector are based in London.”

In recent oil-trading sessions, demand had essentially took over supply issues, and early last week, the Organization of the Petroleum Exporting Countries and allied producers agreed to extend their production-cut agreement through March 2020, in a largely expected move.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 12.70.

The projected lower bound is: 11.10.

The projected closing price is: 11.90.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 6 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 26 black candles for a net of 5 black candles.

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 30.2277. This is not an overbought or oversold reading. 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 51.67. 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 buy 16 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 23. This is not a topping or bottoming area. 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 buy 14 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.020 at 11.930. Volume was 1% above average (neutral) and Bollinger Bands were 31% wider than normal.

Open High Low Close Volume___
11.995 12.130 11.910 11.930 25,135,652

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

Moving Averages: 10-period     50-period     200-period
Close: 12.03 12.11 12.30
Volatility: 38 43 41
Volume: 28,835,508 29,030,772 27,355,286

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 is currently 3.0% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into USO (mildly bullish). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 8 periods.

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