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United States Oil (USO) hover near highest levels since mid-September

United States Oil (USO) hover near highest levels since mid-September

Oil prices held steady near three-month highs on Friday on the back of easing Sino-U.S. trade tensions that have weighed on demand as well as the global economic growth outlook.

Brent futures rose 2 cents, or 0.03%, to 66.56 a barrel by 0145 GMT, while U.S. West Texas Intermediate crude was down 9 cents, or 0.15%, at $61.09 per barrel.

Both benchmarks were still on track for a third consecutive weekly rise.

Progress in a long-running trade dispute between the United States and China, the world’s two biggest oil consumers, has boosted expectations for higher energy demand next year.

China on Thursday announced a list of import tariff exemptions for six oil and chemical products from the United States, days after the world’s two largest economies announced an interim trade deal.

“A world with less uncertainty (following last week’s proposed U.S.-China trade agreement) was the real driver of the market optimism on the 2020 outlook,” ANZ Research said in a note.

JP Morgan and Goldman Sachs raised its 2020 oil price outlook earlier this week amid OPEC-led output cuts and an improved global trade outlook.

The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia agreed in early December to make a further cut of 500,000 barrels per day (bpd) from Jan. 1 on top of previous reductions of 1.2 million bpd.

The trade deal progress aside, a drop in U.S. crude inventories also supported oil prices to hold near three-month highs.

U.S. crude oil stockpiles fell by 1.1 million barrels to 446.8 million barrels in the week to Dec. 13, the Energy Information Administration (EIA) said on Wednesday.

ANZ Research also said “an expected fall in U.S. drilling activity should support oil prices.”

A U.S. weekly drilling report by energy services firm Baker Hughes Co is due to be released on Friday. U.S. drilling firms added 4 oil rigs in the week to Dec. 13, bringing the total count to 667.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 11.96.

The projected upper bound is: 13.34.

The projected lower bound is: 12.30.

The projected closing price is: 12.82.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 9 white candles and 1 black candles for a net of 8 white candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.

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 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 89.8317. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 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 68.47. 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 132 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 124.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 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 9 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.040 at 12.780. Volume was 69% below average (consolidating) and Bollinger Bands were 4% wider than normal.

Open     High      Low     Close     Volume___
12.750 12.850 12.710 12.780 7,676,713
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 12.50 11.87 12.02
Volatility: 10 28 39
Volume: 13,770,089 20,718,526 25,582,170

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 6.4% above 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 moderate flows of volume into USO (mildly bullish). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 36 periods.

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