United States Oil (USO) prices should be much lower based on supply

United States Oil (USO) prices should be much lower based on supply

United States Oil (USO) prices should be much lower based on supply

Oil prices dropped again after the fifth-week loss. The price of West Texas Intermediate (WTI) for December delivery and Brent crude for January delivery lost 6.2 per cent and 4.9 per cent, respectively, during the week ending November 16.

In the previous week ending November 9, WTI and Brent lost 4.7 per cent and 3.6 per cent, respectively, and WTI and Brent settled at USD60.19 and USD70.18 per barrel, respectively, at the end of the week.

US President Donald Trump believes “oil prices should be much lower based on supply,” he wrote on Twitter on November 12. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production.”

On November 13, oil prices plunged, dropping to its lowest level for the year, as OPEC once again revised its projection for oil demand in 2019 downwards. WTI dropped USD4.24 to settle at USD59.69 a barrel, while Brent was down USD4.65 to close at USD65.47 a barrel.

US crude has been mired into a bear market due to constant pullback in oil prices over the last six weeks. In its weekly report issued On November 13, OPEC trimmed its forecast for 2019 oil demand for the fourth straight month.

The organisation projected global demand for crude will increase by 1.29 million barrels per day (b/d) in 2019, down 70,000 bpd from its forecast last month.

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 13.46.

The projected upper bound is: 12.86.

The projected lower bound is: 11.34.

The projected closing price is: 12.10.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 19 white candles and 28 black candles for a net of 9 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 37.6224. This is not an overbought or oversold reading. The last signal was a buy 1 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 26.66. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 32 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 -89. This is not a topping or bottoming area. The last signal was a buy 1 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 sell 28 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.070 at 12.140. Volume was 52% above average (neutral) and Bollinger Bands were 95% wider than normal.

Open High Low Close Volume___
11.880 12.180 11.695 12.140 34,529,556

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 12.41 14.34 13.80
Volatility: 42 34 32
Volume: 39,336,456 25,489,808 21,559,750

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 12.0% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of USO (mildly bearish). Our trend forecasting oscillators are currently bearish on USO and have had this outlook for the last 24 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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