United States Oil (USO) further market-supporting action by Opec and its allies offset some concern over the outlook for demand
Oil prices extended their gains on Thursday, with Brent rising above US$61 a barrel as a surprise drop in US crude inventories and the prospect of further market-supporting action by Opec and its allies offset some concern over the outlook for demand.
Brent crude ended the session up 50 cents, or 0.8 per cent, at US$61.67 a barrel, having risen 2.5 per cent on Wednesday.
West Texas Intermediate (WTI) crude settled 26 cents, or 0.5 per cent, higher at US$56.23, adding to the previous session’s 2.8 per cent gain after data showed that US inventories dropped by 1.7 million barrels last week.
“We feel that even minor supportive headlines on the trade front or geopolitical developments could prompt an exaggerated price response in a market in which net speculative WTI length had dropped into the red zone,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Oil’s gains were supported by the drop in US crude inventories last week, and one analyst said stocks could fall further in coming weeks.
“The seasonal weakness in crude oil processing now appears to have come to an end, and processing should increase again,” Commerzbank analyst Carsten Fritsch said.
Still, WTI time spreads have been pressured by continuing inventory builds in Cushing Oklahoma, the delivery point for US crude futures.
Stockpiles at the hub rose by about 1.6 million barrels in the week through Oct 22, traders said, citing data from market intelligence firm Genscape.
Brent prices, meanwhile, have risen 14 per cent this year, supported by a supply pact among the Organization of the Petroleum Exporting Countries and its allies.
Since January Opec, Russia and other producers have implemented a deal to cut oil output by 1.2 million barrels per day until March 2020 to support the market. The producers meet on Dec 5-6 to review the policy.
Adding further price support, officials have said that extended supply curbs are an option to offset the weaker demand outlook for Opec crude in 2020.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 12.57.
The projected lower bound is: 10.90.
The projected closing price is: 11.74.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 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.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 88.8179. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 14 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 58.16. 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 93 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 214.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 13 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 buy 8 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.080 at 11.730. Volume was 44% below average (neutral) and Bollinger Bands were 38% narrower than normal.
Open High Low Close Volume___
11.700 11.790 11.680 11.730 16,186,654
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.32 11.53 11.89
Volatility: 26 45 39
Volume: 22,573,476 28,072,434 26,190,088
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 1.4% below its 200-period moving average and is in an downward trend. Volatility is low 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 17 periods.