United States Oil (USO) poses threat to Mideast sellers

United States Oil (USO) poses threat to Mideast sellers

United States Oil (USO) poses threat to Mideast sellers

The rivalry between U.S. and Middle Eastern oil producers has jumped up a notch as American crude makes its way right to the heart of Asia, the world’s most-prized energy market.

Royal Dutch Shell Plc has offered a cargo of U.S. West Texas Intermediate Midland crude that’s priced off the Dubai benchmark in its debut during Asian hours on S&P Global Platts’ widely-referenced trading platform, according to two traders and data compiled by Bloomberg.

Offering the shipment — scheduled to be delivered to Singapore, or Linggi or Nipah in Malaysia — against the Middle East’s oil benchmark brings it into direct competition with Gulf grades that’s produced in Saudi Arabia, Abu Dhabi and Qatar. The flow of U.S. oil to Asia, once considered a one-off arbitrage, has expanded in recent years into more frequent shipments.

While U.S. shipments of grades such as WTI Midland and Eagleford are typically priced off the American benchmark WTI, Shell’s offer makes it easier for buyers to compare it against similar-quality oil that refiners across South Korea, Japan and China typically take. The crude can be transferred to other vessels in the Malacca Strait near Singapore, making the logistics less complicated for buyers across Asia.

American exports have eroded the dominance of Middle Eastern crude in Asia, at a time when the Organization of Petroleum Exporting Countries and its allies are restricting their output in an effort to prop up prices. South Korean oil imports from the U.S. rose to about 8.5 MMbbl in June, compared with 3 MMbbl a year earlier. American shipments to Asia are likely to expand further due the start up of two Permian pipelines this year.

The offer by Shell was made for a WTI Midland cargo for delivery on Oct. 15-25 at a premium of $4.55/bbl to Dubai benchmark price, the traders said. The deal was subject to the buyer’s acceptance of a vessel named Phoenix Jamnagar.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 12.45.

The projected lower bound is: 10.89.

The projected closing price is: 11.67.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 24 black candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 6 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 35.8139. This is not an overbought or oversold reading. The last signal was a sell 2 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 51.65. 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 46 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 76. This is not a topping or bottoming area. The last signal was a buy 6 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 4 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.260 at 11.660. Volume was 12% below average (neutral) and Bollinger Bands were 25% narrower than normal.

Open     High      Low     Close     Volume___
11.600 11.710 11.500 11.660 24,403,224
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 11.33 11.66 11.80
Volatility: 47 43 42
Volume: 32,879,132 29,928,390 28,456,900

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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 1.2% below its 200-period moving average and is in an downward 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 bearish on USO and have had this outlook for the last 13 periods.

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