United States Oil (USO) currently driven by sentiment rather than the real fundamentals

United States Oil (USO) currently driven by sentiment rather than the real fundamentals

United States Oil (USO) currently driven by sentiment rather than the real fundamentals

Oil prices are not going anywhere, at least until this time next year.

Brent Crude will still trade range-bound in the $50s a year from now, the heads of the world’s largest independent oil and commodity trading groups said on Wednesday.

The still unresolved U.S.-China trade dispute, mounting evidence that global economies are slowing, and rising U.S. oil production will continue to keep a lid on oil prices in a market that has factored in too little—or none at all—geopolitical risk premium, the chief executives of oil traders Vitol, Trafigura, and Gunvor said at the Oil & Money Conference in London this week.

Vitol is bearish on oil prices, Trafigura is also bearish in the short term, while Gunvor thinks prices could inch higher but with swings in between, the managers said at the panel ‘Executive Forum: The View from the Trading Floor’ at the conference.

“Without some resolutions to the trade wars then we remain a little bit bearish, a five handle for us,” Russell Hardy, chief executive officer at Vitol, the world’s largest independent oil trader, said at the event, predicting where oil prices will be a year from now, as carried by S&P Global Platts.

A $50s handle for oil prices is the price at which oil currently trades, with Brent Crude at around $58 early on Thursday.

Like many other analysts, the executives of the top oil traders in the world see trade disputes and faltering economies as the chief oil market driver these days, despite the increased geopolitical risk following the unprecedented attack on critical Saudi oil infrastructure that took 5 percent of global oil supply offline in the middle of September.

Not all analysts, however, are as bearish on oil prices as are the world’s top oil traders. S&P Global Platts Analytics sees Brent Crude ending this year trading at $65 to $70 a barrel, expecting crude oil stock draws in November and December to turn around the current bearish sentiment.

The market is currently driven by sentiment “rather than the real strong fundamentals of it,” Shell’s van Beurden told Bloomberg.  

“It’s very hard to make sense out of the market even on the best of days.”  

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 11.49.

The projected upper bound is: 12.11.

The projected lower bound is: 10.23.

The projected closing price is: 11.17.

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 24 white candles and 26 black candles for a net of 2 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 55.7471. This is not an overbought or oversold reading. The last signal was a buy 4 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 44.20. 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 83 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 -38. This is not a topping or bottoming area. The last signal was a buy 3 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 11 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.200 at 11.190. Volume was 29% below average (neutral) and Bollinger Bands were 31% wider than normal.

Open     High      Low     Close     Volume___
11.110 11.220 11.050 11.190 21,299,068
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 11.13 11.53 11.83
Volatility: 26 51 40
Volume: 25,356,964 31,420,206 26,779,448

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 5.4% 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 volume flowing into and out of USO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on USO and have had this outlook for the last 7 periods.

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