United States Oil (USO) EIA confirms another inventory draw

United States Oil (USO) EIA confirms another inventory draw

United States Oil (USO) EIA confirms another inventory draw

The U.S. Energy Department’s inventory release showed that crude stockpiles recorded a second straight weekly draw. The decline – though lower than anticipated – helped to prop up the commodity, which was also supported by reports of Saudi Arabia preparing to cut shipments to refiners in the United States in an effort to tighten the market and boost prices. The front month West Texas Intermediate crude futures gained 2.8% (or $1.43) to $52.58 per barrel yesterday, Zacks reported.

The federal government’s EIA report revealed that crude inventories fell by 1.2 million barrels for the week ending Dec 7, following a decrease of 7.3 million barrels in the previous week. The analysts surveyed by The Wall Street Journal had expected crude stocks to go down some 2.8 million barrels.

Despite decreasing for the second straight week, oil inventories have generally trended higher over the past few months. In fact, stockpiles rose for 10 straight weeks before the previous week’s decline and are up more than 40 million barrels since September. The steady rise is on the verge of shifting the U.S. crude market from year-over-year storage deficit to a surplus. At 442 million barrels, current crude supplies are less than 1% below the year-ago figure and are 7% above the five-year average.

Moreover, the latest report shows that stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – rose 1.1 million barrels to 39.4 million barrels.

The crude supply cover was down from 25.9 days in the previous week to 25.5 days. In the year-ago period, the supply cover was 26.1 days.

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 12.65.

The projected upper bound is: 11.58.

The projected lower bound is: 9.85.

The projected closing price is: 10.71.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 16 white candles and 32 black candles for a net of 16 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 38.2676. This is not an overbought or oversold reading. The last signal was a buy 10 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 37.86. 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 8 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 -29. This is not a topping or bottoming area. The last signal was a buy 10 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 8 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.390 at 10.820. Volume was 36% above average (neutral) and Bollinger Bands were 13% narrower than normal.

Open High Low Close Volume___
11.090 11.099 10.780 10.820 35,792,032

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

Moving Averages: 10-period 50-period 200-period
Close: 10.98 12.94 13.68
Volatility: 52 45 35
Volume: 36,296,872 33,040,790 23,016,102

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 20.9% 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 41 periods.

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