United States Oil (USO) prices touch 2019 highs, supported by OPEC

United States Oil (USO) prices touch 2019 highs, supported by OPEC

United States Oil (USO) prices touch 2019 highs, supported by OPEC

Oil prices were little changed after hitting 2019 highs on Tuesday, maintaining recent strength on the back of expectations for OPEC to continue production cuts.

U.S. oil prices have climbed 9 percent in the last six weeks, as the supply cuts are now expected to continue through the rest of 2019. The Organization of the Petroleum Exporting Countries cancelled its April meeting this week after a shorter get-together in Azerbaijan.

The move to cancel the meeting favored Russia over Saudi Arabia, which originally wanted to use the meeting to extend output curbs until the end of the year, Commerzbank said in a note. OPEC will next meet in June.

“Some people might consider that there’s a rift between Saudi Arabia and Russia over the postponement of this meeting, resulting in supply cuts not occurring as fast as the market would like,” said Andy Lipow, president of Lipow Oil Associates in Houston.

“However, I think OPEC and non-OPEC producers are determined to get the supply and demand dynamics better into balance, recognizing that U.S. shale production is going to continue to rise.”

Brent crude oil futures were up 9 cents at $67.63 a barrel at 12:01 p.m. EST (1601 GMT), having earlier risen to a 2019 peak of $68.20, their highest since November 2018.

U.S. West Texas Intermediate (WTI) futures were unchanged at $59.09 a barrel. They also earlier touched their highest since November at $59.57.

OPEC and a group of non-affiliated producers including Russia, known as OPEC+, cut supply in 2019 to halt a slump in prices that began in the second half of last year on booming U.S. production and fears of a global economic slowdown.

Prices have been further supported by U.S. sanctions against oil exports from Iran and Venezuela.

Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning prices for immediate delivery are more expensive than barrels for delivery in the future.

, which has risen by more than 2 million barrels per day (bpd) since early 2018, to about 12 million bpd.

The American Petroleum Institute (API), an industry group, releases its figures at 4:30 p.m. EST (2130 GMT), followed by the government’s official figures on Wednesday.

Overall, the bias in prices is: Upwards.

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

By the way, prices are vulnerable to a correction towards 11.69.

The projected upper bound is: 12.86.

The projected lower bound is: 11.78.

The projected closing price is: 12.32.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 32 white candles and 17 black candles for a net of 15 white 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 81.4286. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 16 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 65.49. 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 56 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 122.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 6 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 buy 3 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.030 at 12.280. Volume was 49% below average (neutral) and Bollinger Bands were 59% narrower than normal.

Open High Low Close Volume___
12.380 12.410 12.236 12.280 15,588,123

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 12.02 11.46 12.96
Volatility: 17 31 39
Volume: 21,251,728 23,800,232 25,205,740

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 5.2% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into USO (mildly bullish). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 8 periods.

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