United States Oil (USO) rises on expectations of Fed rate cut
Oil prices rose on Tuesday, on track to close at a two-week high, on optimism the U.S. Federal Reserve will cut interest rates this week for the first time in more than 10 years, boosting demand expectations in the world’s biggest oil user.
Meanwhile, ahead of weekly data, crude oil inventories in the United States were also forecast to have dropped for a seventh straight week.
Analysts also noted the market was up on optimism over U.S.-China trade talks, which could boost oil demand around the world.
U.S. crude stockpiles were forecast to have dropped by 2.6 million barrels last week, according to analysts in a Reuters poll. The American Petroleum Institute (API), an industry group, is due to release its inventory report at 4:30 p.m. EDT, followed by government data on Wednesday morning.
If correct, that would put crude stocks down for a seventh week in a row for the first time since they fell for a record 10 weeks in a row in January 2018, according to Refinitiv data going back to 1982. Total crude stockpiles, however, would still be about 3% over the five-year (2014-2018) for this time of year.
U.S. and Chinese negotiators also meet this week for their first in-person talks since agreeing to a truce to their trade dispute at a Group of 20 meeting last month.
However, expectations for progress during the two-day Shanghai meeting are low, so officials and businesses hope Washington and Beijing can at least detail commitments for “goodwill” gestures and clear the path for future negotiations.
Trump warned China against waiting out his first term in office to finalize any trade deal, saying if he wins re-election in the November 2020 U.S. presidential contest, the outcome could be no agreement or a worse one.
Supply risks are still a concern as tensions remained high around the Strait of Hormuz, through which about a fifth of the world’s oil passes.
BP Plc has not taken any of its own oil tankers through the strait since a July 10 attempt by Iran to seize one of its vessels, its chief financial officer said.
Meanwhile, the United States has formally asked Germany to join France and Britain in a mission to secure the Strait of Hormuz and to combat Iranian aggression, the U.S. Embassy in Berlin said.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 12.86.
The projected lower bound is: 11.26.
The projected closing price is: 12.06.
A white body occurred (because prices closed higher 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 23 white candles and 25 black candles for a net of 2 black candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 71.8443. This is not an overbought or oversold reading. The last signal was a buy 6 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 54.79. 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 32 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 20. This is not a topping or bottoming area. The last signal was a buy 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 9 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.260 at 12.080. Volume was 15% below average (neutral) and Bollinger Bands were 25% narrower than normal.
Open High Low Close Volume___
11.840 12.095 11.820 12.080 21,739,964
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 11.72 11.78 12.02
Volatility: 29 44 41
Volume: 25,230,068 28,250,270 27,675,186
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.
UNTD ST OIL FUND is currently 0.5% above its 200-period moving average and is in an upward trend. Volatility is high 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 24 periods.