United States Oil (USO) prices to their lowest in over two months on a smaller-than-expected decline in U.S. crude inventories

United States Oil (USO) prices to their lowest in over two months on a smaller-than-expected decline in U.S. crude inventories

United States Oil (USO) prices to their lowest in over two months on a smaller-than-expected decline in U.S. crude inventories

Oil prices fell almost 4% to their lowest in over two months on a smaller-than-expected decline in U.S. crude inventories and fears of a global economic slowdown due to the U.S.-China trade war.

The Energy Information Administration (EIA) said U.S. crude stockpiles fell nearly 300,000 barrels last week, less than the 900,000-barrel decline analysts forecast in a Reuters poll and well below the 5.3 million-barrel drawdown the American Petroleum Institute (API) reported late Wednesday.

The decline last week reduced crude stocks from their highest since July 2017 seen the previous week, but at 476.5 million barrels, they were still about 5% above the five-year average for this time of year.

“The oil inventories report has added to the bearish sentiment prevailing in today’s trading session,” said Abhishek Kumar, head of analytics at Interfax Energy in London, noting “Demand-side concerns emerging from the ongoing U.S.-China trade war are expected to remain the key driver weighing on oil prices.”

Brent futures fell $2.58, or 3.7%, to settle at $66.87 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $2.22, or 3.8%, to close at $56.59.

Those were the lowest closes for Brent since March 12 and WTI since March 8.

Arab leaders gather in Saudi Arabia on Thursday for emergency summits that Riyadh hopes will deliver a strong message to Iran that regional powers will defend their interests against any threat following attacks on Gulf oil assets this month.

As Arab leaders gathered in Saudi Arabia, the U.S. Iran envoy said the United States will respond with military force if its interests are attacked by Iran.

Many analysts also expect OPEC-led supply cuts to be extended until the end of 2019 as the group wants to prevent oil prices from falling back to levels seen in late 2018 when Brent slumped to $50 per barrel.

Since OPEC and its allies started withholding supply in January, oil prices have risen by about 30%.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 12.38.

The projected lower bound is: 11.12.

The projected closing price is: 11.75.

Candlesticks

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 24 white candles and 25 black candles for a net of 1 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with UNTD ST OIL FUND), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 24.3278. This is not an overbought or oversold reading. The last signal was a buy 2 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 29.78. 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 24 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 -125.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 5 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 4 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.480 at 11.760. Volume was 32% above average (neutral) and Bollinger Bands were 23% wider than normal.

Open High Low Close Volume___
12.280 12.290 11.720 11.760 29,508,720

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

Moving Averages: 10-period 50-period 200-period
Close: 12.58 12.91 12.67
Volatility: 41 31 38
Volume: 26,310,272 22,825,818 25,516,456

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 7.2% 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 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 18 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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