United States Oil (USO) Output cuts from Opec likely to continue till end of 2019

United States Oil (USO) Output cuts from Opec likely to continue till end of 2019

United States Oil (USO) Output cuts from Opec likely to continue till end of 2019

Oil prices are expected to trade positive in the near term on the back of Opec production cuts as well as supply disruptions in Iran and Venezuela, analysts said. However, rise in US oil production will continue to weigh on oil prices.

The Organisation of the Petroleum Exporting Countries (Opec) and its allies, including Russia, are currently cutting production by about 1.2 million barrels to boost oil prices, whereas oil production is affected in Venezuela and Iran due to sanctions by the US administration.

“With Opec members suggesting for a continuation in supply cuts for 2H (second half) 2019, oil prices look poised to trade positive as traders contemplate growing supply tightness,” said Benjamin Lu, commodity analyst from Singapore based Phillip Futures.

“We urge caution for the longer term, however, as geopolitical uncertainties cloud market outlook for oil prices in second half of 2019.”

Saudi Arabia’s oil minister Khalid Al Falih in an interview to Russia’s Sputnik news agency last week indicated that a global deal on limiting oil production could be extended till the end of 2019 despite loss of Iranian crude due to US sanctions.

“We are not seeing a shortage in the market. I think we will focus on inventories and try to bring it down in terms of what we look at the global production and we try to adjust by having this Opec+ agreement from July to end of the year possibly,” Al Falih said replying to a question on the impact of Iran situation on world oil markets.

Brent, the global benchmark was up by 0.14 per cent to trade at $70.85 per barrel when markets closed on Friday. US crude West Texas Intermediate was up by 0.21 per cent at $61.94 per barrel.

Last month, the US administration decided to end Iran sanction waivers granted to eight countries that import oil from the Islamic Republic in order to choke off Tehran’s main source of revenue. The move follows reimposition of restrictions on the country late last year for its nuclear related activities.

“US waivers granted to eight buyers of Iranian crude oil last November expired this week, but the market had concluded that Washington would struggle to bring down Iranian exports to zero,” Ole Hansen, head of commodity strategy at Saxo Bank said.

Meanwhile, US crude oil production levels notched a record high of 12.3 million bpd putting pressure on oil prices.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 13.41.

The projected lower bound is: 12.37.

The projected closing price is: 12.89.

Candlesticks

During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 22 white candles and 26 black candles for a net of 4 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 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 26.6979. This is not an overbought or oversold reading. The last signal was a sell 6 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 45.40. 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 sell 6 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 -126.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 4 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 sell 6 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.050 at 12.870. Volume was 12% above average (neutral) and Bollinger Bands were 37% narrower than normal.

Open High Low Close Volume___
12.870 13.010 12.850 12.870 26,193,802

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 13.32 12.63 12.81
Volatility: 33 26 37
Volume: 24,811,126 21,046,318 24,877,280

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 0.5% above 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 0 periods.

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