United States Oil (USO) Prices Rise as OPEC Extends Record Oil Production Cuts to End-July
Oil prices rose over 2% early on Monday to their highest in 3 months when OPEC and its allies including Russia agreed to extend record oil production cuts until the end of July.
Brent crude LCOc1 climbed to as high as $43.41 a barrel and was trading at $43.32 by 0000 GMT, up $1.02, or 2.4%. U.S. West Texas Intermediate (WTI) crude CLc1 gained 83 cents, or 2.1%, to $40.38 a barrel. each hit their highest since March 6.
Brent has nearly doubled since the beginning of April, propped up by an unprecedented production cut of 9.7 million barrels per day by the Organization of the petroleum exporting Countries (OPEC), Russia and allies.
The OPEC+ group prolonged on Saturday the deal to withdraw nearly 10% of worldwide supplies from the market by a third month to end-July.
Following the deal, world’s top exporter Saudi Arabia sharply raised its monthly crude prices for July.
Still, compliance to the agreement among OPEC members like Iraq and Nigeria remains a problem.
“While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for previous underperformance, we still assume they’re going to probably still have some commitment issues over the course of the summer,” Shayne Heffernan, CEO and founder of Heffx said.
“The potential return of Libyan output may additionally cause considerable challenges for the OPEC leadership.”
In southwestern Libya, two major oilfields have reopened after months of a blockade that shut off most of the country’s production.
Even as oil prices recovered, they’re still well below the prices of most U.S. shale producers, resulting in shutdowns, layoffs and cost cutting in the world’s largest producer.
The number of operational U.S. oil and natural gas rigs fell to a record low for a fifth week in a row in the week to June 5, according to data from Baker Hughes Co.
Nearly 30% of U.S. offshore oil output was also shut on Friday as tropical storm Cristobal entered the Gulf of Mexico.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 35.24.
The projected lower bound is: 22.03.
The projected closing price is: 28.63.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 6 rising windows in the last 50 candles–this makes the current rising window even more bullish.
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 91.1697. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 9 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 60.60. 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 22 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 189.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 8 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 23 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 1.370 at 28.870. Volume was 26% below average (neutral) and Bollinger Bands were 64% narrower than normal.
Open High Low Close Volume 28.590 29.190 28.370 28.870 11,820,579
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 26.39 27.86 73.72 Volatility: 49 139 97 Volume: 11,016,374 23,006,480 8,782,678
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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 60.8% 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 moderate flows of volume into USO (mildly bullish). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 10 periods.
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