United States Oil (USO) prices up as Trump threatens Iran, OPEC mulls output cuts

United States Oil (USO) prices up as Trump threatens Iran, OPEC mulls output cuts

United States Oil (USO) prices up as Trump threatens Iran, OPEC mulls output cuts

Crude oil prices jumped higher at the start of the trading week after US President Trump threatened Iran via Twitter, warning officials in Tehran that if they want a fight, that will “be the end” of the Islamic Republic. Tensions between the two countries have been heating up since the US administration tightened sanctions on Iranian oil exports after withdrawing from an Obama-era nuclear disarmament deal.

Prices were probably helped higher as OPEC members led by Saudi Arabia meeting in Jeddah signaled a desire to extend an output cut accord through year-end. Russia – the leading non-OPEC producer participating in the scheme – may have other ideas however. Its energy minister Alexander Novak reportedly talked about relaxing restrictions, which expire next month if they are not renewed.

The move higher may struggle to follow through as risk appetite falters. Scheduled comments from Fed Chair Jerome Powell headline an otherwise quiet offering on the economic calendar Monday. He is likely to reiterate the US central bank’s preference for a wait-and-see approach, dashing traders’ hopes for easing to support sentiment amid slowing global growth and mounting political uncertainty.

Cycle-sensitive oil prices are likely to be pressured lower alongside stocks in this scenario. Gold prices may likewise fall – extending a four-day losing streak – as fading rate reduction prospects boost the US Dollar and Treasury bond yields. That bodes ill for benchmark anti-fiat and non-interest-bearing asset. Markets currently price the probability of a cut before year-end at 73.5 percent.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 13.62.

The projected lower bound is: 12.59.

The projected closing price is: 13.11.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 24 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 71.9099. This is not an overbought or oversold reading. 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 52.56. 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 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 81. This is not a topping or bottoming area. The last signal was a buy 7 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 16 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.060 at 13.080. Volume was 4% above average (neutral) and Bollinger Bands were 5% narrower than normal.

Open High Low Close Volume___
13.160 13.255 13.032 13.080 23,587,662

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

Moving Averages: 10-period 50-period 200-period
Close: 12.91 12.86 12.74
Volatility: 25 25 37
Volume: 25,339,672 21,807,652 25,161,552

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 2.7% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. 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 10 periods.

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