United States Oil (USO) drops to 2-month low on economic woes
Oil futures declined, with U.S. and global benchmark prices logging their lowest finish in about two months, as downbeat economic data weighed on prospects for energy demand, and domestic crude stockpiles registered a third straight weekly climb.
The U.S. added a modest 135,000 private-sector jobs in September, ADP said Wednesday, less than the forecast gain of 152,000. That followed data from the Institute for Supply Management a day earlier that showed its manufacturing index fell to 47.8 last month from 49.1, marking the lowest level since June 2009. A reading below 50 reflects deteriorating conditions.
“The ADP was less than inspiring and not enough for oil traders to shake off their slowing economy funk,” said Phil Flynn, senior market analyst at Price Futures Group. The “surprise plunge” in the ISM manufacturers index had already “raised concerns about a major global economic slowdown and a bad start to the fourth quarter of the year.”
West Texas Intermediate crude for November delivery CLX19, -0.08% fell 98 cents, or 1.8%, to settle at $52.64 a barrel on the New York Mercantile Exchange. December Brent BRNZ19, -0.26%, the global benchmark, declined by $1.20, or 2%, to $57.69 a barrel on ICE Futures Europe. Both crude benchmarks marked the lowest front-month contract settlements since Aug. 8, according to FactSet data.
While the market is taking the EIA supply data “as a negative because of weak economic sentiment, supplies of distillates are 8% below average—and is a problem considering the new IMO rules,” said Flynn, referring to the International Maritime Organization rules that kick in on Jan. 1, 2020, requiring less sulfur content in marine fuel.
Back on Nymex, November gasoline RBX19, -0.01% lost 2.8 cents, or 1.8%, to $1.5455 a gallon, while November heating oil HOX19, -0.41% fell 2.6 cents, or 1.3%, at $1.873 a gallon.
November natural gas NGX19, +1.07% ended 3.6 cents, or 1.6%, lower at $2.247 per million British thermal units. On average, analysts expect the EIA’s report Thursday to show a 109 billion-cubic-foot weekly increase in U.S. natural-gas stockpiles, according to an S&P Global Platts poll.
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 11.70.
The projected upper bound is: 11.91.
The projected lower bound is: 10.02.
The projected closing price is: 10.96.
A black body occurred (because prices closed lower 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.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 11.2828. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 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 37.04. 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 77 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 -139.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.210 at 10.980. Volume was 6% below average (neutral) and Bollinger Bands were 2% narrower than normal.
Open High Low Close Volume___
11.200 11.200 10.885 10.980 28,535,882
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.73 11.62 11.79
Volatility: 22 51 42
Volume: 25,484,926 31,362,104 27,240,920
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.
UNTD ST OIL FUND is currently 6.9% 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 1 periods.