United States Oil (USO) prices mark highest finish in a month as U.S. supplies post surprise weekly drop

United States Oil (USO) prices mark highest finish in a month as U.S. supplies post surprise weekly drop

United States Oil (USO) prices mark highest finish in a month as U.S. supplies post surprise weekly drop

Oil futures marked their highest finish in about a month on Wednesday, after a U.S. government report showed an unexpected weekly decline in U.S. crude supplies — the first in six weeks.

With refiners set to ramp up activity ahead of the International Maritime Organization’s Jan. 1 regulations limiting sulfur content marine fuel, “and with strong exports and subdued imports, a return to crude draws could be the trend going forward,” said Matt Smith, director of commodity research at ClipperData.

December WTI crude CLZ19, -0.59%, on its first full session as a front-month contract, rose $1.49, or 2.7%, to settle at $55.97 a barrel on the New York Mercantile Exchange. That was the highest front-month contract settlement since Sept. 26, according to Dow Jones Market Data.

Global benchmark Brent crude for December BRNZ19, -0.28%, meanwhile, added $1.47, or 2.5%, to $61.17 a barrel on the ICE Futures Europe exchange, the highest front-month contract finish since Sept. 27.

The Energy Information Administration on Wednesday reported that U.S. crude supplies fell for the first time in six weeks, down 1.7 million barrels for the week ended Oct. 18. Separately, supplies of oil from the U.S. Strategic Petroleum Reserve, or SPR, fell by 1 million barrels for the week.

Crude supplies were forecast to increase by 4.7 million barrels, according to analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a rise of 4.45 million barrels.

On Wednesday, Russian Energy Minister Alexander Novak said there were no formal proposals to change the terms of the output-cut agreement, according to Reuters.

Crude has been pressured lower by worries about the world’s appetite for oil during an economic slowdown that is enveloping much of the developed world.

“Worries over the global crude demand persist, particularly from Asia’s colossal oil importers like China, South Korea and Japan, whose manufacturing engines continue to sputter,” said Innes. “Added to the picture, the cartel has also lost tremendous market share to the United States, whose booming shale output has transformed it into the world’s biggest oil producer as well as a net exporter.”

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 12.50.

The projected lower bound is: 10.79.

The projected closing price is: 11.65.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
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 26 white candles and 24 black candles for a net of 2 white 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 78.4340. This is not an overbought or oversold reading. The last signal was a buy 13 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 56.56. 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 92 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 205.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 12 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 7 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.310 at 11.650. Volume was 12% below average (neutral) and Bollinger Bands were 37% narrower than normal.

Open     High      Low     Close     Volume___
11.275 11.700 11.270 11.650 25,899,352
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 11.27 11.53 11.89
Volatility: 27 46 39
Volume: 23,084,718 28,585,628 26,355,096

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 2.0% below its 200-period moving average and is in an downward 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 bearish on USO and have had this outlook for the last 16 periods.

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