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United States Oil (USO) declines as the United States and China prepared to sign a preliminary trade deal and as Middle East tensions eased

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United States Oil (USO) declines as the United States and China prepared to sign a preliminary trade deal and as Middle East tensions eased

Oil prices climbed on Tuesday after five days of declines as the United States and China prepared to sign a preliminary trade deal and as Middle East tensions eased.

Brent crude gained 31 cents, or 0.5%, to trade at $64.51 per barrel. U.S. West Texas Intermediate crude futures rose 15 cents or 0.3% to settle at $58.23 per barrel. 

That put WTI front-month futures on track to close below the second month for the first time since Nov. 19, which is known in the trading industry as contango.

In addition, oil also found technical support after WTI fell to a more than five-week low of $57.72 before bouncing off the 200-day moving average.

The outlook for oil demand was supported by the expected signing of a Phase 1 U.S.-China trade agreement on Wednesday, marking a major step in ending a dispute that has cut global growth and dented demand for oil.

“Oil prices are tentatively rebounding after seller exhaustion kicked (in) as investors await the next developments on the trade front and whether we see a strong pickup with global demand following the phase-one trade deal,” Edward Moya, senior market analyst at OANDA in New York, said in a report.

China has pledged to buy more than $50 billion in energy supplies from the United States over the next two years, according to a source briefed on the trade deal.

Despite the trade dispute, China’s crude oil imports in 2019 surged 9.5% from the previous year, setting a record for a 17th straight year as demand growth from new refineries propelled purchases by the world’s top importer, data showed.

However, gains were limited as concerns about possible supply disruptions eased due to a decline in tensions in the Middle East.

Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, said his country would work for oil market stability amid heightened U.S.-Iranian tensions.

He also said it was too early to talk about whether the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, would continue with production curbs that are due to expire in March.

Separately, U.S. crude oil inventories likely declined by 0.8 million barrels last week, a preliminary Reuters poll showed on Monday. 1/8EIA/S 3/8

The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, on Tuesday, and the Energy Information Administration on Wednesday.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 12.84.

The projected lower bound is: 11.76.

The projected closing price is: 12.30.

Candlesticks

A white body occurred (because prices closed higher 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 29 white candles and 21 black candles for a net of 8 white candles.

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 9.4595. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 9 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 41.93. 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 -132.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 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 sell 4 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.080 at 12.280. Volume was 19% below average (neutral) and Bollinger Bands were 15% narrower than normal.

Open     High      Low     Close     Volume___
12.270 12.320 12.200 12.280 18,568,358
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 12.71 12.31 12.06
Volatility: 30 29 39
Volume: 23,489,952 19,442,370 25,395,568

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 1.9% above its 200-period moving average and is in an downward 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 bearish on USO and have had this outlook for the last 0 periods.

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