United States Oil (USO) Prices Fall as Investors Seek Clarity on U.S.-China Trade Deal

United States Oil (USO) Prices Fall as Investors Seek Clarity on U.S.-China Trade Deal

United States Oil (USO) Prices Fall as Investors Seek Clarity on U.S.-China Trade Deal

Oil prices on Monday slid off near three-month highs hit last week as investors searched for clarity beyond the initial impact of a trade deal between the United States and China that’s expected to boost flows between the top two global economies.

Brent crude oil futures fell 22 cents, or 0.3% to $65.00 a barrel by 0400 GMT, while West Texas Intermediate crude was down 23 cents or 0.4% to $59.84 a barrel.

The United States and China cooled long-simmering trade tensions on Friday, announcing a “phase one” agreement that reduces some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of American farm products and other goods.

“It seems the market has now fully priced (in) the phase 1 trade agreement, so we are going to need further news if we are going to push through the important (technical) resistance that is just ahead,” said Michael McCarthy, chief market strategist at CMC Markets.

The Friday agreement averted additional tariffs on Chinese goods totaling $160 billion that the United States was set to impose over the weekend, but investors remained cautious as they awaited precise details of how the trade deal would work.

U.S. Trade Representative Robert Lighthizer said on Sunday the deal will nearly double U.S. exports to China over the next two years and is “totally done” despite the need for translation and revisions to its text.

China’s State Council’s customs tariff commission said on Sunday that it has suspended additional tariffs on some U.S. goods that were meant to be implemented on Dec. 15.

Data from China on Monday that showed industrial output and retail sales growth accelerating more than expected in November did offer some support for oil prices.

Still, investors remained cautious as growth in China is expected to slow further next year, with the government likely to set its economic growth target at around 6% in 2020 compared with this year’s 6-6.5%.

Brent has rallied this year, supported by efforts by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia to cut production.

The alliance, known as OPEC+, has agreed to lower supply a further 500,000 barrels per day as of Jan. 1, which could boost oil prices.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 11.75.

The projected upper bound is: 13.05.

The projected lower bound is: 12.00.

The projected closing price is: 12.52.

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 29 white candles and 21 black candles for a net of 8 white candles.

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 62.9032. 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 62.74. 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 128 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 120.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 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 5 period(s) ago.

UNTD ST OIL FUND closed up 0.120 at 12.490. Volume was 34% below average (neutral) and Bollinger Bands were 14% narrower than normal.

Rex Takasugi – TD Profile

Open     High      Low     Close     Volume___
12.410 12.630 12.390 12.490 17,101,092
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 12.20 11.74 12.00
Volatility: 21 29 39
Volume: 19,024,698 21,892,310 25,824,238

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 4.1% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 32 periods.

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