United States Oil (USO) investors are taking a wait-and-see approach
Oil prices ended mixed on Thursday, with U.S. prices rebounding modestly from concerns that arose from U.S. President Donald Trump signing into law a bill backing protesters in Hong Kong, fuelling tensions with China.
Brent crude lost 14 cents, or 0.2%, at $63.92 a barrel, paring earlier losses.
West Texas Intermediate crude reversed losses to close up 13 cents, or 0.2%, at $58.24, with many U.S. traders away for the Thanksgiving holiday.
China warned the United States that it would take “firm countermeasures” in response to U.S. legislation backing anti-government protesters in Hong Kong.
Investors are concerned that the move might delay further a preliminary agreement between the United States and China to put an end to their trade war that has slowed global economic growth, and consequently consumption of oil.
“The approval of the Hong Kong legislation backing protesters is likely to put the trade agreement into question as China has reiterated its threat of retaliation,” said Hussein Sayed, chief market strategist at FXTM.
“If investors suspect that the trade agreement is under real danger, expect to see a sharp sell-off in December. For now, investors are taking a wait-and-see approach.”
Investors have also been focused on next week’s meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, which have been withholding production to support prices.
“We expect OPEC+ to roll over its current production-cut deal, which is set to expire at the end of March, by three to six months,” UBS oil analyst Giovanni Staunovo said.
“The upshot is that deeper cuts by the entire membership are unlikely.”
Russian oil companies proposed not to change their output quotas as part of the global deal until the end of March, putting pressure on OPEC+ to avoid any major policy change.
They also offered to exclude production of gas condensate, a light oil, from the output quotas as Russia has been struggling to meet its supply-reduction targets in recent months.
Easing supply concerns, Libya’s National Oil Corp said facilities at the 70,000-bpd El Feel oilfield had suffered only minor damage in fighting over the past two days, allowing production to restart.
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 11.62.
The projected upper bound is: 12.64.
The projected lower bound is: 11.64.
The projected closing price is: 12.14.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black 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.
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 81.0964. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 15 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 57.85. 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 117 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 sell 0 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 3 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.050 at 12.140. Volume was 45% below average (neutral) and Bollinger Bands were 35% narrower than normal.
Open High Low Close Volume___
12.160 12.220 12.015 12.140 15,076,839
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 12.01 11.63 11.98
Volatility: 32 27 38
Volume: 22,554,184 23,237,410 25,870,550
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% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 bullish on USO and have had this outlook for the last 21 periods.