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United States Oil (USO) Prices Rally as Saudi-Russian Deal “Very, Very Close”

United States Oil (USO) Prices Rally as Saudi-Russian Deal “Very, Very Close”

Oil prices rallied in Asia on Tuesday from a dramatic 8%-fall in their last session.

International Brent Oil Futures rose 2.43% to $34.11 by 9:52 PM ET (2:52 AM GMT) and U.S. Crude Oil WTI Futures jumped 4.1% to $27.15.

Russian Direct Investment Fund’s chief executive told CNBC overnight that his country and Saudi Arabia are “very, very close” to an agreement to cut production.

“I think the whole market understands that this deal is important, and it will bring lots of stability, so much important stability to the market, and we are very close,” Kirill Dmitriev, who heads the Russian sovereign wealth fund, added in his interview.

Andrey Kostin, chief executive of VTB Bank, agreed with Dmitriev as he said in a CNBC interview, “Russia is definitely very much interested in stabilizing oil prices and … there’s the political will. No one is interested in low oil prices. Neither the United States nor Russia, nor the Saudis. From this point of view, I think there should be a reasonable agreement achieved at the end of the day.”

But even as OPEC+ members are said to be preparing for a virtual meeting on Thursday, investors are focusing on whether the two producers can reach an agreement on production cuts amid plummeting demand.

This Saudi-Russia rift, that’s really key to the deal,” Herman Wang, S&P Global (NYSE:SPGI) Platts Middle East and OPEC managing editor, told CNBC.

“Set aside whether the U.S. will participate or not,” he said. “Without Saudi and Russia on the same page, there’s no deal to be had at all,” he added.

Technical Indicators

Overall, the bias in prices is: Downwards.

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

By the way, prices are vulnerable to a correction towards 7.90.

The projected upper bound is: 6.81.

The projected lower bound is: 3.91.

The projected closing price is: 5.36.

Candlesticks

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 21 white candles and 29 black candles for a net of 8 black 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 77.8986. This is not an overbought or oversold reading. The last signal was a buy 3 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 41.90. 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 2 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 121.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 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 5 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.420 at 5.480. Volume was 232% above average (trending) and Bollinger Bands were 35% wider than normal.

Open     High      Low     Close     Volume___
5.620 5.707 5.370 5.480 162,802,208
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 4.87 8.39 11.01
Volatility: 151 139 78
Volume: 155,100,064 74,028,928 37,222,204

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 50.2% 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 57 periods.

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