United States Oil (USO) prices rose overnight after the Chinese government signalled that progress had been made in trade talks
Oil prices rose overnight after the Chinese government signalled that progress had been made in trade talks with the United States but crude’s gains were capped by forecasts of a build up in US stockpiles.
Brent crude oil settled up 74 US cents, or 1.3 per cent at $US59.70 a barrel while US West Texas Intermediate crude was 85 US cents, or 1.6 per cent, higher at $US54.16 per barrel.
Representatives from Washington DC and Beijing have made progress in trade talks, China’s Vice Foreign Minister Le Yucheng said, and problems can be resolved as long as both sides respect each other.
“While the encouraging mood across financial markets will remain stimulated by trade optimism, risk aversion could still make an abrupt return should talks drag on or turn sour,” said Lukman Otunuga, analyst at FXTM.
The International Monetary Fund last week forecast that fallout from the US-China trade conflict and trade disputes across the world would slow global growth in 2019 to 3.0 per cent, the weakest in a decade.
Lower economic growth typically squeezes demand for commodities such as oil.
Prices were also pressured by forecasts of a build up in US crude stockpiles.
Inventories are expected to have risen for a sixth straight week, while distillates and gasoline stocks likely fell in the week to October 18, a Reuters poll suggested.
The poll was conducted ahead of reports from industry group the American Petroleum Institute (API) on Tuesday and the US Energy Information Administration (EIA) on Wednesday.
“Expectations that the API and EIA will report that US crude oil inventories increased by around 3 million barrels over the last week certainly do not help sentiment,” ING analyst Warren Patterson said.
“These more visible stock builds, along with demand concerns continuing to linger, suggest it is becoming increasingly more difficult to see a sustained rally in prices ahead of the OPEC+ meeting in early December.”
The Organisation of the Petroleum Exporting Countries, Russia and other oil producers, an alliance known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020.
The producers meet again on December 5-6.
Russian Energy Minister Alexander Novak said US oil production is likely to peak in the next few years as current oil prices are capping the pace of expansion.
The brisk pace of US production, now the world’s highest, in the past few years has been a key factor behind the relative weakness in oil prices.
Output has slowed recently, however.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 11.47.
The projected upper bound is: 12.21.
The projected lower bound is: 10.47.
The projected closing price is: 11.34.
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 26 white candles and 24 black candles for a net of 2 white 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 7 rising windows in the last 50 candles–this makes the current rising window even more bullish.
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 63.0873. This is not an overbought or oversold reading. The last signal was a buy 12 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 49.61. 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 91 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 136.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 11 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 6 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.130 at 11.340. Volume was 24% below average (neutral) and Bollinger Bands were 34% narrower than normal.
Open High Low Close Volume___
11.310 11.440 11.240 11.340 22,258,796
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.20 11.53 11.88
Volatility: 24 47 39
Volume: 22,894,324 29,025,150 26,371,364
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 4.6% 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 15 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.