United States Oil (USO) Middle East Tensions Lift Prices
Oil prices are currently trending higher owing to rising Middle East tensions and an attack on Saudi oil facility that led to a disruption in the global supply of crude. The coordinated drone strikes on key Saudi oil facilities have removed nearly 5% of global supplies, an attack that the United States blamed Iran for.
U.S. Secretary of State Mike Pompeo said that the attack was a “state-on-state act of war” by Iran, but the United States is still committed to find a diplomatic solution with Iran. U.S. Secretary of Defense Mark Esper added that the United States will send troops to Saudi Arabia but that would be “defensive in nature.” U.S. treasury secretary Steven Mnuchin said that “the United States will continue its maximum pressure campaign against Iran’s repressive regime, which attempts to achieve its revolutionary agenda through regional aggression while squandering the country’s oil proceeds.”
Needless to say, the coordinated drone strikes affected the world’s largest oil procession plant. In fact, Saudi Energy Minister Prince Abdulaziz bin Salman said that almost 5.7 million barrels a day of crude oil and gas have been affected.
Meanwhile, a positive trade deal between the United States and China would support crude since the trade dispute has impeded global economic expansion. Things are, in fact, looking up at the trade front. While U.S. Trade Representative’s office did say that trade talks with China were “productive” over the weekend, China’s Commerce Ministry added that the talks were “constructive.”
Concerns about economic recession were also weighing on crude prices for quite some time. But, higher factory output and strong consumer spending data have eased worries about an impending recession.
The Federal Reserve recently said that industrial production, a measure of factory, mining and utility output, increased at a seasonally adjusted rate of 0.6% in August from the prior month. The reading was well above analysts’ expectation of a 0.2% increase. At the same time, retail sales rose 0.4% last month, lifted by spending on motor vehicles, building materials, healthcare and hobbies.
Nonetheless, Brent crude futures at one point of time increased 63 cents/b (0.98%) from Friday’s closing price to $64.91/b. U.S. oil futures, by the way, moved 57 cents/b (0.98%) higher at $58.66/b.
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 11.84.
The projected upper bound is: 13.15.
The projected lower bound is: 11.26.
The projected closing price is: 12.20.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
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 31.1098. This is not an overbought or oversold reading. The last signal was a sell 8 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 55.92. 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 70 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 39. This is not a topping or bottoming area. The last signal was a sell 3 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 28 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.010 at 12.210. Volume was 29% below average (neutral) and Bollinger Bands were 4% narrower than normal.
Open High Low Close Volume___
12.140 12.240 12.040 12.210 21,584,136
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 12.04 11.67 11.77
Volatility: 77 51 43
Volume: 40,476,500 31,661,596 27,631,146
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 3.7% above its 200-period moving average and is in an upward 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 bullish on USO and have had this outlook for the last 13 periods.