United States Oil (USO) OPEC-Russia production deal to continue
OPEC ministers meet Monday, but this weekend’s G-20 leaders summit could have much more impact on oil prices, depending on whether the outcome is good or bad for the global economy — and therefore oil demand.
The world’s markets are focused on Saturday’s meeting between President Donald Trump and China’s President Xi Jinping to see if the two will agree to some type of trade truce and continue negotiations towards a broader deal. In the oil market, the trade wars have taken a toll on end demand in important markets like Europe and Asia, and that dynamic has helped hold down prices even as tensions between the U.S. and Iran flare up.
“The meeting that really counts is the meeting at the G-20,” said Daniel Yergin, vice chairman of IHS Markit. “The question is why is demand growth weaker this year than previous years… we show demand this year growing at 1.1 million barrels a day. We see U.S.[production] growth up by 1.5 million barrels a day.”
OPEC brings together a room of personalities and interests, and oil market pros are watching the dynamic of the relationship between Russia and OPEC, especially Saudi Arabia, and the strained relations between Iran and other OPEC members. Iran is suffering under U.S. sanctions and has threatened to begin enriching uranium at a higher level, which could hurt its agreement with countries that remain in the nuclear agreement the U.S. dropped out of last year.
Iran has also been blamed for attacking Saudi oil assets, including two oil tankers. Last week, President Donald Trump aborted what could have been a retaliatory attack on Iran for shooting down a U.S. drone.
“I don’t think you want to get in between the dueling glares of the Saudi and Iranian oil ministers. I’m sure the enmity is palpable,” said John Kilduff of Again Capital.
OPEC-Russia production deal to continue
OPEC, Russia and other producers are widely expected to continue with an agreement for a 1.2 million barrel a day production cut, originally agreed to last year. OPEC holds its market monitoring and ministerial meetings Monday, and then ‘OPEC+,’ which includes Russia and other producers, convenes Tuesday.
“In the broader context of what can make oil move, I think OPEC is pretty proforma. We think they’ll roll this deal over,” said Helima Croft, head of global commodities strategy at RBC. “There are war drum beating in the background, and there is no offramp for this.”
Overall, the bias in prices is: Upwards.
The projected upper bound is: 13.04.
The projected lower bound is: 11.50.
The projected closing price is: 12.27.
During the past 10 bars, there have been 6 white candles and 2 black candles for a net of 4 white candles. During the past 50 bars, there have been 23 white candles and 24 black candles for a net of 1 black candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 84.2105. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 15 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 60.17. 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 10 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 112.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 14 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 8 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed unchanged at 12.290. Volume was 9% above average (neutral) and Bollinger Bands were 32% wider than normal.
Open High Low Close Volume___
12.290 12.390 12.262 12.290 26,439,112
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.67 12.30 12.38
Volatility: 33 41 40
Volume: 31,695,990 27,476,760 26,944,790
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 0.8% below its 200-period moving average and is in an upward trend. Volatility is high 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 2 periods.