United States Oil (USO) investors brace for economic data in Asia due this week
Oil prices edged lower on Monday as investors brace for economic data in Asia due this week that should give a reading on how China’s coronavirus epidemic has affected oil demand.
Brent crude was at $56.99 a barrel, down 33 cents by 0121 GMT after rising 5.2% last week, the biggest weekly gain since September 2019.
U.S. West Texas Intermediate crude fell 13 cents to $51.92 a barrel, after a 3.4% gain last week.
The weekly gains, the first since early January, were spurred by hopes that stimulus measures taken by China to support its economy amid the coronavirus outbreak could lead to a recovery in oil demand in the world’s largest importing country.
But the International Energy Agency (IEA) said the virus is already set to cause oil demand to fall by 435,000 barrels per day (bpd) in the first quarter from the same period a year ago, in what would be the first quarterly drop since the depths of the financial crisis in 2009.
Analysts at Capital Economics said over the weekend that it is too soon to start assessing the longer-term economic fallout from the epidemic.
Investors are also anticipating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will approve a proposal to deepen production cuts in a move to tighten global supplies and support oil prices.
The group, also known as OPEC+, has an agreement to cut oil output by 1.7 million bpd until the end of March.
A technical committee has recommended the group reduces production by another 600,000 bpd because of the impact from the coronavirus on China’s oil demand.
Russia, facing a growing oil glut, could support further output cuts.
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 11.51.
The projected upper bound is: 11.47.
The projected lower bound is: 10.40.
The projected closing price is: 10.93.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.
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 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 90.6833. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 41.86. 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 2 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 51. This is not a topping or bottoming area. The last signal was a buy 7 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 2 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.110 at 10.950. Volume was 13% above average (neutral) and Bollinger Bands were 59% wider than normal.
Open High Low Close Volume___
10.960 10.990 10.840 10.950 24,456,976
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 10.65 11.99 11.82
Volatility: 34 29 39
Volume: 30,187,880 21,031,288 26,043,164
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 7.4% 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 22 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
Latest posts by HEFFX Australia (see all)
- All Tesla (NASDAQ:TSLA) Cars Being Produced Now Have Full Self-Driving Hardware - October 29, 2020
- Facebook (NASDAQ:FB) Not-so-happy Days - October 29, 2020
- Apple (NASDAQ:AAPL) Stock Hit Hard by Virus and Election - October 29, 2020