United States Oil (USO) Saudi comments indicating OPEC would extend supply cuts supported prices
Oil futures ended the session lower after back-and-forth trading on Monday, as Saudi comments indicating OPEC would extend supply cuts supported prices, while concerns that U.S. tariffs on China and Mexico would hurt demand weakened crude market sentiment.
Saudi Arabia signaled that OPEC, together with Russia, would continue managing global crude supplies to avoid a surplus.
“We will do what is needed to sustain market stability beyond June. To me, that means drawing down inventories from their currently elevated levels,” Energy Minister Khalid al-Falih was quoted as saying by the Saudi-owned Arab News newspaper.
U.S. West Texas Intermediate crude futures settled 25 cents lower at $53.25 per barrel, slipping half a percent to the weakest closing price since Feb. 12. Earlier in the session, WTI hit a session high of $54.63 per barrel.
Concerns that a U.S.-China trade war, and threats of tariffs on Mexico from the United States, would diminish global crude demand, however, weighed on oil prices.
“Focus has shifted from the supply to the demand side as a U.S.-China trade agreement has proven elusive and as worries over the debilitating effects of tariffs on global economic growth have now shifted to Mexico,” Jim Ritterbusch of Ritterbusch and Associates said in a note.
Crude futures fell with the stock market on Monday after data showed a closely-watched gauge of U.S. manufacturing activity slumped to its lowest level in 2½ years in May.
Mexico on Monday said it would reject a U.S. idea to take in all Central American asylum seekers if it is raised at talks this week with U.S. President Donald Trump’s administration, which is threatening to impose tariffs over immigration concerns.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 12.36.
The projected upper bound is: 11.64.
The projected lower bound is: 10.29.
The projected closing price is: 10.96.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 3.8348. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 4 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 22.38. 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 26 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 -152.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 7 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 6 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed down -0.110 at 10.990. Volume was 45% above average (neutral) and Bollinger Bands were 101% wider than normal.
Open High Low Close Volume___
11.300 11.320 10.960 10.990 32,528,886
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 12.17 12.86 12.64
Volatility: 46 34 39
Volume: 29,270,166 23,592,740 25,649,066
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 13.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 20 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.