United States Oil (USO) prices dropped after disappointing economic data from China and Europe revived global demand fears
Oil prices sank 3% on Wednesday after disappointing economic data from China and Europe revived global demand fears and U.S. crude inventories rose unexpectedly for the second week in a row.
Brent crude dropped 3.2%, to $59.36 a barrel, erasing the previous session’s sharp gains after the United States moved to delay tariffs on some Chinese products. The global benchmark rose 4.7% on Tuesday, its biggest daily percentage gain since December.
U.S. West Texas Intermediate (WTI) crude futures shed 3.3%, to $55.23 a barrel, having risen 4% the previous session, the most in just over a month.
China reported weak data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies.
The global economic slowdown, amplified by tariff conflicts and uncertainty over Brexit, is also hitting European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed.
Gasoline stocks fell by 1.4 million barrels, compared with analysts’ expectations in a Reuters poll for an increase of 25,000 barrels, as demand jumped to a record 9.93 million barrels per day, according to EIA data going back to 1991.
Profit taking after Tuesday’s gains also weighed on crude prices on Wednesday, analysts said.
“We do expect Brent to continue recovering to $65 per barrel in the coming months,” Commerzbank analyst Carsten Fritsch said.
“Oil demand in China and the United States is unlikely to weaken noticeably as a result of the trade conflict, though if this were to happen, Saudi Arabia would further reduce its output.”
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 11.84.
The projected upper bound is: 12.25.
The projected lower bound is: 10.64.
The projected closing price is: 11.45.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 23 white candles and 25 black candles for a net of 2 black candles.
A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend this pattern implies an end to the rally as the bulls appear to have exhausted themselves.
During a downtrend (which appears to be the case with UNTD ST OIL FUND) the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 82.1529. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 47.51. 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 43 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 -15. This is not a topping or bottoming area. The last signal was a buy 3 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 1 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.430 at 11.440. Volume was 51% above average (neutral) and Bollinger Bands were 26% narrower than normal.
Open High Low Close Volume___
11.460 11.520 11.230 11.440 41,846,320
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.31 11.63 11.84
Volatility: 59 44 42
Volume: 39,312,336 30,354,730 28,379,980
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 3.4% below 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 10 periods.