United States Oil (USO) gains after approaching bear-market territory

United States Oil (USO) gains after approaching bear-market territory

United States Oil (USO) gains after approaching bear-market territory

Oil futures recovered from early losses Wednesday to end higher in the wake of a four-session losing streak that had threatened to push U.S. prices into bear-market territory.

“Oil got hammered the past couple trading days and traders saw an opportunity for cheap prices, combined with equities recovering today on the hope of [Federal Reserve interest] rate cuts,” said James Hatzigiannis, senior commodities associate at Long Leaf Trading Group. U.S. benchmark stock indexes traded broadly higher in Tuesday dealings as oil futures settled.

West Texas Intermediate crude for July delivery CLN19, -0.90% added 23 cents, or 0.4%, to settle at $53.48 a barrel on the New York Mercantile Exchange — two pennies short of recouping all that it lost a day earlier. It fell Monday for a fourth consecutive session to settle at $53.25, the lowest since mid-February.

U.S. oil prices have been falling for weeks on heightened concerns for the global economy and the tension between the U.S. and China over tariffs that could potentially hurt energy demand.

Along with watching stocks and the economy, traders have also been weighing expectations for the production-cut agreement between the Organization of the Petroleum Exporting Countries and their allies ahead of the deal’s expiration at the end of this month. The next OPEC meeting, which had been scheduled for June 25-26, may be postponed to early July at the request of Russia, according to some news reports.

Saudi Energy Minister Khalid al-Falih has called recent volatility “unwarranted” and has said he expects OPEC to help to stabilize prices beyond the end of the global output pact at the start of July. “We have previously stated our commitment to do whatever it takes to stabilize markets and we have delivered on those promises. And I am making that commitment again,” he said, according to recent reports.

Weekly data on U.S. petroleum supplies will be released late Tuesday by the American Petroleum Institute and early Wednesday by the Energy Information Administration.

The EIA is forecast to report a decline in crude supplies of 1.7 million barrels for the week ended May 31, according to a poll of analysts from S&P Global Platts. The survey also shows expectations for an increase of 208,000 barrels for gasoline but distillates, which include heating oil, are seen down by 1.08 million barrels.

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 12.29.

The projected upper bound is: 11.81.

The projected lower bound is: 10.46.

The projected closing price is: 11.14.

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 25 black candles for a net of 1 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 7.3529. 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 26.97. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 27 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 -126.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 8 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 7 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.170 at 11.160. Volume was 0% above average (neutral) and Bollinger Bands were 118% wider than normal.

Open High Low Close Volume___
11.070 11.190 10.950 11.160 22,474,888

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

Moving Averages: 10-period 50-period 200-period
Close: 11.97 12.84 12.63
Volatility: 48 35 39
Volume: 29,433,956 23,599,918 25,526,718

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 11.6% below 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 21 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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