United States Oil (USO) jittery as Saudi Arabia-Russia talks delayed
Global oil prices remain on edge after Saudi Arabia and Russia postponed a meeting about a deal to cut output as the virus pandemic hits demand.
The two countries have been locked in an oil price war for the last month.
Traders are concerned that, with large parts of the world in lockdown, there will be too much crude available, putting pressure on prices.
Last week, crude prices soared after US President Donald Trump suggested that an agreement was imminent.
At the start of Asian trade on Monday, the global benchmark Brent crude fell 12%, but recovered some of this ground. US-traded oil, known as West Texas Intermediate, dropped more than 10% before stabilising to sit 3.5% lower.
Saudi Arabia and Russia, both major oil producing countries, were scheduled to meet on Monday, but the meeting has now been pushed back to Thursday. Prices are expected to remain volatile until then.
Measures in countries across the world to slow the spread of the coronavirus, including the US, UK and much of mainland Europe and Asia, have seen global energy demand fall sharply.
At the same time the month-long oil price war between Saudi Arabia and Russia has left the global market with far more crude than is needed.
The price war came after a deal between the two countries to cut production, in response to the drop in demand, collapsed last month.
That has pushed down prices to lows not seen for almost two decades as traders wait for a new deal to be agreed.
US oil fell by two thirds in the first three months of the year, as it saw its worst quarter on record.
The huge impact on the American energy sector has prompted Washington to attempt to broker an agreement between Saudi Arabia and Russia.
On Thursday oil prices rose by more than 20%, the biggest one-day leap on record, on signs that an end was in sight for the dispute.
Mr Trump had said he expected the two sides to cut supply, while Saudi Arabia called for an emergency meeting of oil producers.
The Russian energy minister also said his country may re-enter talks.
Technical Indicators
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 7.93.
The projected upper bound is: 7.23.
The projected lower bound is: 4.34.
The projected closing price is: 5.78.
Candlesticks
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black 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 72.3684. This is not an overbought or oversold reading. The last signal was a buy 2 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 45.29. 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 157.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 3 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 4 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.790 at 5.900. Volume was 376% above average (trending) and Bollinger Bands were 41% wider than normal.
Open High Low Close Volume___
5.700 6.020 5.440 5.900 225,910,608
Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 4.81 8.51 11.04
Volatility: 142 138 78
Volume: 146,060,160 71,261,048 36,641,088
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 46.6% 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 56 periods.
