United States Oil (USO) production could become less responsive to crude prices as major oil companies expand operations in the nation’s shale fields

United States Oil (USO) production could become less responsive to crude prices as major oil companies expand operations in the nation’s shale fields

United States Oil (USO) production could become less responsive to crude prices as major oil companies expand operations in the nation’s shale fields

U.S. oil production could become less responsive to crude prices as major oil companies expand operations in the nation’s shale fields, now dominated by smaller producers, International Energy Agency officials said at an industry summit on Monday.

Forecasts by majors Exxon Mobil Corp and Chevron Corp for strong production growth in the Permian Basin, the nation’s largest oil field, signal a greater shift in U.S. shale output to the world’s oil majors, which could mean more stable U.S. output, said Toril Bosoni, a senior analyst at Paris-based IEA.

“These major companies have longer-term strategic plans,” Bosoni said at the CERAWeek energy conference in Houston. “Their balance sheets mean they can continue to invest even if prices fall, for a short period of time.”

The two biggest U.S. oil companies last week boasted of their prowess in shale to lure investors, releasing dueling projections that, if realized, would cement the pair as the dominant players with one-third of Permian production potentially under their control within five years.

The United States is now the world’s largest producer of crude, thanks to the boom in shale, with record output of more than 12 million barrels per day, according to U.S. government figures.

U.S. production has risen by about 2 million bpd in the last year alone, a faster-than-expected surge that added to ample global supplies and contributed to a drop in international crude prices from above $86 a barrel in October to about $50 a barrel in December. Global benchmark Brent increased 91 cents to $66.65 a barrel on Monday.

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 11.56.

The projected upper bound is: 12.46.

The projected lower bound is: 11.34.

The projected closing price is: 11.90.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 33 white candles and 17 black candles for a net of 16 white 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).

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 7 rising windows in the last 50 candles–this makes the current rising window even more bullish.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 67.9738. This is not an overbought or oversold reading. The last signal was a sell 10 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 57.65. 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 50 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 32. 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 6 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.130 at 11.860. Volume was 27% below average (neutral) and Bollinger Bands were 54% narrower than normal.

Open High Low Close Volume___
11.870 11.900 11.770 11.860 22,495,988

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

Moving Averages: 10-period 50-period 200-period
Close: 11.79 11.18 13.01
Volatility: 23 32 39
Volume: 22,577,738 25,303,150 25,355,222

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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 8.8% below its 200-period moving average and is in an upward trend. Volatility is low 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 bullish on USO and have had this outlook for the last 2 periods.

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