United States Oil (USO) slammed by worries about the slowing global economy
Oil prices have been crushed by worries about weaker demand and a slowing global economy, but the market could begin to price in greater geopolitical risks if there are more attacks like the one on two oil tankers in the Gulf of Oman on Thursday.
But even as analysts say oil could rise on Mideast tensions, they also note it could fall back to the bottom of a wide range — between about $50 and $80 for Brent, if the trade war fears dim the economic outlook for the buyers of oil.
“I wouldn’t say we’re at a tripwire yet, but we’re getting there,” said John Kilduff, partner with Again Capital. Kilduff said oil was headed to $50 until the news of the attack. There have also been forecasts that if the situation in the Middle East intensifies, the price of crude could touch $100.
After losing 4% on worries of oversupply Wednesday, crude futures bounced back about 2% Thursday on reports the tankers sustained significant fire damage. The attacks were the second such incident involving oil shippers in just about a month, near the entrance to the Strait of Hormuz, the world’s busiest oil shipping lanes. West Texas Intermediate crude futures settled at $52.22, up 2.2% on the day, while Brent crude futures for May closed up 2.2% at $61.31, after touching a high of $62.64 per barrel.
“You’re in the $60s or $80s. If it’s all about trade wars, the economy is tanking” and oil would head toward $60, said Helima Croft, head of global commodities strategy at RBC. “That’s the binary nature of this market.” She said a major geopolitical incident could drive the price of Brent as high as $80, especially if trade worries dissipate.
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 12.00.
The projected upper bound is: 11.55.
The projected lower bound is: 10.13.
The projected closing price is: 10.84.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 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 40.3361. This is not an overbought or oversold reading. 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 33.60. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -61. This is not a topping or bottoming area. The last signal was a buy 4 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 14 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.240 at 10.880. Volume was 52% above average (neutral) and Bollinger Bands were 153% wider than normal.
Open High Low Close Volume___
11.070 11.080 10.810 10.880 34,928,368
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 11.01 12.62 12.52
Volatility: 53 37 39
Volume: 30,766,410 25,042,816 26,018,952
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 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 bearish on USO and have had this outlook for the last 28 periods.