United States Oil (USO) Going to be a market with tremendous volatility
“It’s going to be a market with tremendous volatility,” said Carlos Pascual, IHS Markit senior vice president. “In 2018, the price of [Brent] oil went between $50 and $86 a barrel, but the average was $70. For the person looking at it and saying ‘$70, that’s not a big deal,’ depending on when you were buying, what country and what situation, the difference between $50 and $86 could be huge.”
About 4,000 representative of the global energy industry gather this week in Houston, where IHS Markit holds its annual CERAWeek conference. Oil CEOs from Chevron, BP, Hess, Occidental, and others will be in attendance. Secretary of State Mike Pompeo and Energy Secretary Rick Perry are expected to speak, as is OPEC Secretary General Mohammed Barkindo.
The U.S. has sanctioned Iran for its nuclear program and Venezuela for the human rights and other abuses by President Nicolas Maduro’s regime, which is supported by the military. Both countries are members of OPEC.
The U.S. and other nations have recognized opposition leader Juan Guaido, who declared himself president of Venezuela six weeks ago. The country’s oil production has been in decline, and some forecasts put the country’s production at just 500,000 barrels per day by the end of this year.
“We’re looking at a similar kind of [oil] market in 2018. A lot of volatility and an average that keeps us in a similar range of $70 a barrel. In that sense the sanctions on two OPEC members could potentially add to some of the uncertainty and volatility around that market,” Pascual said.
The Saudis have now committed to cut back to 9.8 million barrels a day, after sending close to 11 million barrels a day onto the market in the fall. As Saudi Arabia and Russia committed to cut production, oil prices began to rise again.
But Trump periodically presses OPEC about high prices in tweets. The price of West Texas Intermediate crude reached a high in the futures market of $57.88 per barrel this month, gaining 37 percent from its Dec. 24 low of $42.36. But that low came after a sharp 45 percent decline from the $76.90 it was at on Oct. 3.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 11.56.
The projected upper bound is: 12.39.
The projected lower bound is: 11.17.
The projected closing price is: 11.78.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 34 white candles and 16 black candles for a net of 18 white candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more 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 51.3889. This is not an overbought or oversold reading. The last signal was a sell 9 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 54.57. 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 49 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 -117.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 9 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 -0.080 at 11.730. Volume was 4% below average (neutral) and Bollinger Bands were 49% narrower than normal.
Open High Low Close Volume___
11.510 11.740 11.390 11.730 29,557,460
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.76 11.14 13.02
Volatility: 30 36 39
Volume: 23,180,656 25,672,806 25,341,122
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 gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 9.9% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of USO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 1 periods.
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