United States Oil (USO) lower after U.S. government data revealed that domestic crude supplies rose for a second week in a row

United States Oil (USO) lower after U.S. government data revealed that domestic crude supplies rose for a second week in a row

United States Oil (USO) lower after U.S. government data revealed that domestic crude supplies rose for a second week in a row

Oil futures finished lower on Wednesday after U.S. government data revealed that domestic crude supplies rose for a second week in a row, by nearly 8 million barrels.

The build of 7.9 million barrels in crude supplies, along with build of 1.7 million barrels at the U.S. trading hub in Cushing, Okla. “will temper the recent strength in crude-oil prices,” said Tariq Zahir, managing member at Tyche Capital Advisors.

“Several events over the next few weeks will impact energy prices, with the upcoming OPEC meeting [in December] and the outcome of the China-U.S. [trade] talks,” he told MarketWatch.

Against that backdrop, West Texas Intermediate crude for December delivery CLZ19, -0.05%  fell by 88 cents, or 1.5%, to settle at $56.35 a barrel on the New York Mercantile Exchange.

January Brent crude BRNF20, -0.08% dropped $1.22, or 1.9%, to $61.74 a barrel on ICE Futures Europe, following a 1.3% rise a day earlier for BRNF20, -0.08% the global benchmark.

The Energy Information Administration on Wednesday reported that U.S. crude supplies climbed by 7.9 million barrels for the week ended Nov. 1. Crude supplies were forecast to increase by 2.7 million barrels, according to analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a rise of roughly 4.3 million barrels.

Still, talk of further OPEC cuts may mean that the cartel sees the threat from U.S. shale as “diminishing,” said Phil Flynn, senior market analyst at Price Futures Group.

“Shale has been the nemesis of OPEC over the past five years, after all-time highs in domestic U.S. production prompted the cartel to cut output to keep global prices stable,” he said, in a daily note. “But U.S. producers are now under pressure to trim spending and return profits to shareholders through dividends and share buybacks.”

Meanwhile, the trade war between China and the U.S. has rattled expectations for energy demand and helped to depress energy prices, along with rising production in the U.S.

For now, there appears to be “enough US-China trade deal optimism baked into the markets to keep oil’s month-to-date advance largely intact,” said Han Tan, market analyst at FXTM. “Oil’s outlook remains contingent on US-China trade talks progressing well over the course of November, whereby a signed deal would restore some measure of global demand as economic and trade conditions recover.”

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 12.66.

The projected lower bound is: 10.98.

The projected closing price is: 11.82.

Candlesticks

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 26 white candles and 24 black candles for a net of 2 white candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with UNTD ST OIL FUND). It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 78.6112. This is not an overbought or oversold reading. The last signal was a sell 0 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 56.68. 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 102 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 93. This is not a topping or bottoming area. The last signal was a sell 0 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 17 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.120 at 11.810. Volume was 21% above average (neutral) and Bollinger Bands were 25% narrower than normal.

Open     High      Low     Close     Volume___
11.960 12.077 11.720 11.810 34,027,064
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 11.68 11.58 11.92
Volatility: 28 45 39
Volume: 21,671,092 27,417,036 25,792,528

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 0.9% below 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 6 periods.

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