United States Oil (USO) OPEC and its allies look set to extend oil supply cuts
OPEC and its allies look set to extend oil supply cuts next week at least until the end of 2019 as Iraq joined top producers Saudi Arabia and Russia on Sunday in endorsing a policy aimed at propping up the price of crude amid a weakening global economy.
Iran is the only major OPEC nation yet to have spoken publicly about a need to extend production cuts. Tehran has in the past objected to policies put forward by arch-rival Saudi Arabia, saying Riyadh was too close to Washington.
The United States is not a member of OPEC, nor is it participating in the supply pact. Washington has demanded Riyadh pump more oil to compensate for lower exports from Iran after slapping fresh sanctions on Tehran over its nuclear program.
OPEC and its allies led by Russia have been reducing oil output since 2017 to prevent prices from sliding amid soaring production from the United States, which has become the world’s top producer this year ahead of Russia and Saudi Arabia.
Fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries in recent months.
Iraq has overtaken Iran as OPEC’s second-largest oil producer and its exports have been rising due to investments by Western majors.
Iran’s exports, in contrast, have plummeted to 0.3 million barrels per day in June from as much as 2.5 million bpd in April 2018 due to Washington’s fresh sanctions.
The sanctions are putting Iran under unprecedented pressure. Even in 2012, when the European Union joined U.S. sanctions on Tehran, the country’s exports stood at around 1 million bpd. Oil represents the lion’s share of Iran’s budget revenues.
Washington has said it wants to change what it calls a “corrupt” regime in Tehran. Iran has denounced the sanctions as illegal and says the White House is run by “mentally retarded” people.
Iranian Oil Minister Bijan Zanganeh has not spoken in recent days about the OPEC meeting. He is due in Vienna on Monday.
“Worsening tensions between the U.S. and Iran add potential for oil price volatility that could be tricky for OPEC members to manage,” said Ann-Louise Hittle, vice president, macro oils, at consultancy Wood Mackenzie.
“Geopolitical risk means the supply outlook is tightening, offsetting the moderate weakening in oil demand growth thus far this year,” she added.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 12.79.
The projected lower bound is: 11.24.
The projected closing price is: 12.02.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 3 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 24 black candles for a net of 1 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 68.3962. 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 54.58. 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 11 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 74. 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 9 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.250 at 12.040. Volume was 18% above average (neutral) and Bollinger Bands were 36% wider than normal.
Open High Low Close Volume___
12.330 12.350 11.982 12.040 28,856,784
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.78 12.28 12.37
Volatility: 38 41 40
Volume: 32,008,578 27,744,700 27,027,018
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 2.7% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into USO (mildly bullish). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 3 periods.