United States Oil (USO) Sanctions On Venezuela Could Be An Energy Windfall For India And China

United States Oil (USO) Sanctions On Venezuela Could Be An Energy Windfall For India And China

United States Oil (USO) Sanctions On Venezuela Could Be An Energy Windfall For India And China

Oil sanctions imposed by the U.S. on Venezuela earlier this week could prove to be an energy windfall for India and China.

The Trump Administration announced sanctions against Venezuela’s state-owned oil company, Petróleos de Venezuela, S.A., or PDVSA, targeting the Latin American country’s lucrative crude exports. American refineries are the leading purchasers of Venezuelan oil, and the proposed sanctions would halt all oil trade between the two countries. The resulting over-supply of crude would become available to India and China at heavily discounted prices.

“American sanctions provide an opportunity to re-route PDVSA’s the roughly 500,000 barrels of crude per day it produces to the Indian and Chinese markets,” says Siddharth Aryan, a Director of Energy and Infrastructure at the US-India Strategic Partnership Forum (USISPF). “In the past, Venezuela has agreed to make payments for the oil in Indian rupees that had allowed both countries to [effectively] bypass U.S. sanctions.  The most recent slate of sanctions by the Trump Administration may provide a similar opportunity to India and China.”

The two Asian countries are among the biggest importers—and consumers—of oil globally, with China topping both lists. Beijing imported $162.2 billion worth of crude in 2017 alone, accounting for 18.6% of all imports worldwide that year. India was the fourth-largest importer during the same period, and remains the world’s third-largest consumer behind the U.S. It is also the third-largest purchaser of Venezuelan crude, after the U.S. and China.

Overall, the bias in prices is: Sideways.

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

The projected upper bound is: 12.25.

The projected lower bound is: 10.43.

The projected closing price is: 11.34.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 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 72.8538. This is not an overbought or oversold reading. The last signal was a sell 7 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 58.09. 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 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 136.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 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 21 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.050 at 11.350. Volume was 13% below average (neutral) and Bollinger Bands were 34% narrower than normal.

Open High Low Close Volume___
11.500 11.630 11.261 11.350 27,546,788

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

Moving Averages: 10-period 50-period 200-period
Close: 11.18 10.74 13.32
Volatility: 31 54 39
Volume: 28,217,064 35,073,996 25,042,938

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 14.8% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 16 periods.

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