United States Oil (USO) prices still down about 45% so far this month

United States Oil (USO) prices still down about 45% so far this month

United States Oil (USO) prices still down about 45% so far this month

Oil prices extended gains for a third session on Wednesday, rising alongside broader financial markets as the United States is expected to approve a massive aid package to stem the economic impact of the coronavirus pandemic.

U.S. crude rose to a high of $25.24 a barrel early in the session and was at $24.86 a barrel, up 85 cents, or 3.5%, at 0732 GMT. 

Brent crude was trading up 65 cents, or 2.4%, at $27.80 a barrel after earlier rising to a high of $28.29.

U.S. senators and Trump administration officials have reached an agreement on the $2 trillion stimulus bill which is expected to be passed through the Congress later on Wednesday. 

Still, demand for oil products, especially jet fuel, is falling worldwide as more governments announce nationwide lockdowns to curb the spread of the coronavirus, putting a lid on oil price gains.

Oil prices have fallen 45% so far this month after the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, a grouping known as OPEC+, failed to extend an agreement to cut production and support prices beyond end-March.

“A pare back in production from the OPEC+ and a stabilisation in the coronavirus episode are both needed to lift oil prices back to its pre-collapse prices,” analysts at OCBC Bank said in a note.

In the United States, crude inventories fell by 1.2 million barrels in the week to March 20 to 451.4 million barrels, compared with analysts’ expectations for a build of 2.8 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.

Gasoline and distillate stocks also fell last week, API said.

Analysts said in a Reuters poll on Tuesday that U.S. crude oil stockpiles likely built for a ninth successive week, while inventories of refined products were expected to have dropped, with gasoline set to decline for the eighth straight week. 

The weekly report from the Energy Information Administration (EIA) is due at 10:30 a.m. on Wednesday.

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 8.82.

The projected upper bound is: 6.17.

The projected lower bound is: 3.49.

The projected closing price is: 4.83.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 20 white candles and 29 black candles for a net of 9 black candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 36.2101. 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 25.89. 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 buy 16 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 -83. This is not a topping or bottoming area. The last signal was a buy 0 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 18 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.100 at 4.980. Volume was 100% below average (consolidating) and Bollinger Bands were 264% wider than normal.

Open     High      Low     Close     Volume___
5.060 5.070 4.790 4.980 161,642
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 5.71 9.69 11.29
Volatility: 171 121 71
Volume: 92,144,144 46,704,368 30,935,264

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 55.9% 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 48 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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