United States Oil (USO) prices sink after roller-coaster ride amid U.S.-Iran tensions
Oil prices plunged over 4 percent on Wednesday after a roller-coaster ride as market participants assessed the possibility of a global crude supply disruption by monitoring the latest development of U.S.-Iran tensions.
The United States killed Major General Qassem Soleimani, commander of Iran’s Islamic Revolution Guard Corps Quds Force, in an airstrike in Baghdad on Friday, escalating tensions in the Middle East.
Market participants feared that the rising Mideast tensions could impact energy production in the oil-rich region, which accounts for almost one third of global oil supply, analysts have said.
Oil prices surged more than 3 percent immediately after the Soleimani news came out, notching a multi-month high, and continued to rise on Monday.
The market on Tuesday took a little breather over the course of Monday trading. Risk factors were at least temporarily reassessed, and equity markets recovered while oil gave back some of its gains, JBC energy said in a note.
However, Iran launched ballistic missiles at Iraqi bases housing U.S. troops in retaliation for the U.S. killing of Soleimani between 01:45 a.m. and 2:15 a.m. Wednesday local time (2245 and 2315 GMT on Tuesday).
International benchmark Brent crude surged more than 4 percent in response to the attack to a high of 71.75 U.S. dollars per barrel, its highest since September.
U.S. West Texas Intermediate crude (WTI) spiked more than 4 percent in overnight trading, when it hit 65.65 dollars a barrel.
On Wednesday, U.S. President Donald Trump said that the Iranian missile attack inflicted no U.S. casualties and that “Iran appears to be standing down,” calling it “a good thing” for all parties concerned.
Analysts said traders have interpreted the comment as a move toward de-escalation.
Both Brent crude and WTI crude reversed the gains and settled more than 4 percent lower on Wednesday.
Analysts have said that the impact of U.S.-Iran tensions on the market may be short-lived.
“Despite their influence recently, we doubt that U.S.-Iran tensions will play more than a minor role in deciding the best and worst-performing asset classes in 2020 as a whole, at least outside the Middle East,” said Oliver Jones, a senior markets economist at the economic research consultancy Capital Economics.
He added that historical evidence shows that market reaction to even major U.S. military interventions in the Middle East is hard to predict, and often quickly swamped by other things.
In addition, comments from the United Arab Emirates (UAE)’s Energy Minister Suhail Al Mazrouei also helped ease fears of supply disruption.
He said on Wednesday that the market is well supplied at the moment and called for de-escalation in order to maintain the security of the oil markets.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 12.29.
The projected upper bound is: 13.22.
The projected lower bound is: 12.13.
The projected closing price is: 12.68.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.
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 53.8813. This is not an overbought or oversold reading. The last signal was a sell 5 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 51.18. 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 sell 1 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 -71. This is not a topping or bottoming area. The last signal was a sell 0 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 sell 0 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.470 at 12.660. Volume was 137% above average (neutral) and Bollinger Bands were 20% narrower than normal.
Open High Low Close Volume___
13.060 13.070 12.390 12.660 55,420,476
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 12.92 12.24 12.06
Volatility: 29 29 39
Volume: 17,839,214 19,393,220 25,339,328
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 is currently 5.0% above its 200-period moving average and is in an upward 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 volume flowing into and out of USO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 48 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.