United States Oil (USO) Saudi Arabia’s energy minister seeks to calm the market

United States Oil (USO) Saudi Arabia’s energy minister seeks to calm the market

United States Oil (USO) Saudi Arabia’s energy minister seeks to calm the market

Crude prices fell more than 2% to multi-month lows on Monday as the rising number of cases of the new coronavirus in China and city lockdowns there deepened concerns over oil demand, even as Saudi Arabia’s energy minister sought to calm the market.

Brent crude <LCOc1> fell by $1.36 a barrel, or 2.2%, to $59.33 by 0425 GMT, having earlier dropped to $58.68, its lowest since late October. U.S. crude <CLc1> was down by $1.30, or 2.4%, to $52.89, having earlier eased to $52.15, the lowest since early October.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman Al-Saud said on Monday he was watching developments in China and said he felt confident the new virus would be contained.

Markets are being “primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite (the virus’s) very limited impact on global oil demand,” he said.

With the coronavirus’s ability to spread getting stronger most financial markets are being hit, although many are closed in Asia due to Lunar New Year holidays.

“Such extreme pessimism occurred back in 2003 during the SARS outbreak though it did not cause a significant reduction in oil demand,” Prince Abdulaziz said.

He also said he was confident the kingdom and other members of the Organization of the Petroleum Exporting Countries (OPEC), along with producers in a group known as OPEC+, had the capability to respond and steady the oil market if needed.

OPEC+, which includes Russia and other producers, has been withholding supply to support oil prices and recently increased its agreed output reduction by 500,000 barrels per day (bpd) to 1.7 million bpd through March.

Prince Abdulaziz said on Friday the aim of OPEC+ was to cut seasonal inventory builds that typically occur in the first half of the year. All options were open when OPEC+ meets in Vienna in March, he said.

Technical Indicators

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 11.97.

The projected lower bound is: 10.87.

The projected closing price is: 11.42.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 28 white candles and 21 black candles for a net of 7 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 12.5773. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 5 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 26.90. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 12 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 -180.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 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 11 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.230 at 11.430. Volume was 11% above average (neutral) and Bollinger Bands were 54% wider than normal.

Open     High      Low     Close     Volume___
11.490 11.500 11.310 11.430 24,408,240
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 12.09 12.33 12.02
Volatility: 23 29 39
Volume: 20,074,512 18,918,502 25,322,636

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 4.9% below its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect moderate flows of volume out of USO (mildly bearish). Our trend forecasting oscillators are currently bearish on USO and have had this outlook for the last 7 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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