United States Oil (USO) global oversupply and economic worries weigh on sentiment

United States Oil (USO) global oversupply and economic worries weigh on sentiment

United States Oil (USO) global oversupply and economic worries weigh on sentiment

Oil prices rebounded on Friday, clawing back some of the ground lost this week, but remained close to their lowest levels in more than a year as rising U.S. inventories and concern over global economic growth kept markets under pressure.

Brent crude oil was up $1.20, or 2.3 percent, at $53.36 a barrel by 0830 GMT, having earlier risen more than 3 percent. It had dropped 4.2 percent on Thursday.

U.S. light crude was up $1.20, or 2.7 percent, at $45.81, after rising 3.6 percent in early trade.

Oil prices fell to their lowest in almost 18 months this week and are down more than 20 percent for the year, depressed by ample supplies that have filled fuel tanks worldwide.

The United States has emerged as the world’s biggest crude producer this year, pumping 11.6 million barrels per day (bpd), more than both Saudi Arabia and Russia.

Russian Energy Minister Alexander Novak said on Thursday that rising protectionism and the unpredictability of the U.S. administration had greatly contributed to global oil price volatility over the past two years.

Novak also said Russia would cut its crude output by between 3 million and 5 million tonnes in the first half of 2019 as part of a deal between producers. 

Earlier this month, the Organization of the Petroleum Exporting Countries and its allies including Russia, agreed to cut output by 1.2 million bpd, or more than 1 percent of global consumption, starting in January in a bid to help clear a supply overhang.

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 11.97.

The projected upper bound is: 10.44.

The projected lower bound is: 8.58.

The projected closing price is: 9.51.

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 16 white candles and 32 black candles for a net of 16 black candles.

A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold (which appears to be the case with UNTD ST OIL FUND) to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.

A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend (which appears to be the case with UNTD ST OIL FUND) it is called a bullish hammer.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 37.8092. This is not an overbought or oversold reading. The last signal was a buy 1 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 35.02. 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 1 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 -86. This is not a topping or bottoming area. The last signal was a buy 1 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 5 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.280 at 9.620. Volume was 33% above average (neutral) and Bollinger Bands were 17% wider than normal.

Open High Low Close Volume___
9.590 9.647 9.370 9.620 36,578,668

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

Moving Averages: 10-period 50-period 200-period
Close: 10.04 12.04 13.58
Volatility: 72 53 38
Volume: 40,604,424 35,534,444 23,777,810

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 29.1% 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 49 periods.

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