United States Oil (USO) prices are being supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC)

United States Oil (USO) prices are being supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC)

United States Oil (USO) prices are being supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC)

Oil prices rose to their highest for 2019 on Monday after data showed refinery processing in China, the world’s second-largest oil consumer, climbed to a record in 2018, despite a slowing economy last year.

Prices are further being supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), analysts said.

International Brent crude oil futures were at $62.94 per barrel at 0404 GMT, up 24 cents, or 0.4 percent, from their last close. Brent earlier rose above $63 for the first time in 2019.

U.S. West Texas Intermediate (WTI) crude futures were at $54.05 a barrel, up 25 cents, or 0.5 percent. It was the first time this year that WTI rose above $54 a barrel.

Traders said the price rises came after data released by China’s National Bureau of Statistics on Monday showed crude oil refinery throughput climbed to record 603.57 million tonnes in 2018, or 12.12 million barrels per day (bpd), up 6.8 percent from the previous year.

The strong oil demand figures came despite China’s 2018 economic growth slowing to the weakest in 28 years, at 6.6 percent versus 6.8 percent in 2017.

Although the slowdown was in line with expectations and not as sharp as some analysts had expected, the cooling of the world’s second-largest economy casts a shadow over global growth.

“The global outlook remains murky, despite emerging positives from a dovish Fed (now boosting U.S. mortgage applications), faster China easing (China credit growth stabilizing) and a more durable U.S.-China truce,” U.S. bank J.P. Morgan said in a note.

Despite this, analysts said supply cuts led by OPEC would likely support crude oil prices.

“Brent can remain above $60 per barrel on OPEC+ compliance, expiry of Iran waivers and slower U.S. output growth,” J.P. Morgan said.

It recommended investors should “stay long” crude oil, referring to buying futures in the expectation that prices will rise.

In the United States, energy firms cut the number of rigs drilling for oil by 21 in the week to Jan. 18, taking the total count down to 852, the lowest since May 2018, energy services firm Baker Hughes said in a weekly report on Friday.

It was biggest decline since February 2016, as drillers reacted to the 40 percent plunge in U.S. crude prices late last year.

However, U.S. crude oil production still rose by more than 2 million bpd in 2018, to a record 11.9 million bpd.

With the rig count stalling, last year’s growth rate is unlikely to be repeated in 2019, although most analysts expect annual production to average well over 12 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 12.23.

The projected lower bound is: 10.31.

The projected closing price is: 11.27.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black candles.

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 87.7907. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 4 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 59.90. 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 16 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 97. This is not a topping or bottoming area. The last signal was a sell 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 buy 13 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.280 at 11.310. Volume was 33% above average (neutral) and Bollinger Bands were 12% wider than normal.

Open High Low Close Volume___
11.120 11.370 11.043 11.310 40,840,248

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

Moving Averages: 10-period 50-period 200-period
Close: 10.89 10.95 13.40
Volatility: 39 56 39
Volume: 32,480,452 37,534,204 24,749,378

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 15.6% 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 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 8 periods.

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