Home Commodities United States Oil (USO) slips amid worry about demand slowdown from virus

United States Oil (USO) slips amid worry about demand slowdown from virus

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United States Oil (USO) slips amid worry about demand slowdown from virus

Oil prices fell for a fifth day on Thursday to their lowest since January 2019 as a growing number of new coronavirus cases outside China fuelled fears of a pandemic which could slow the global economy and lower crude demand.

Brent crude was down 63c, or 1.2%, at $52.80 a barrel at 0414 GMT. The contract earlier fell to as low as $52.57, the lowest since January 2 2019. West Texas Intermediate (WTI) futures fell by 65c, or 1.3%, to $48.08 a barrel. It earlier fell to as low as $47.84, the lowest since January 4 2019.

In the five trading sessions on Thursday, Brent has dropped 11%, while WTI has declined 10.6%, their biggest five-day percentage losses since August 2019.

On Wednesday, for the first time ever, the number of new coronavirus infections outside China, the source of the outbreak, exceeded the number of new Chinese cases.

The spread to large economies including South Korea, Japan and Italy has caused concerns that fuel demand growth will be limited. On Wednesday, consultants Facts Global Energy forecast oil demand will grow only 60,000 barrels per day in 2020, or “practically zero”, because of the widening outbreak.

US President Donald Trump assured Americans on Wednesday evening that the risk from coronavirus remained “very low”. However, Asian share markets fell on Thursday morning, as investors fear the coronavirus spread will disrupt the global economy as quarantines and other measures taken to halt its advance slow trade and industry.

Gasoline stockpiles dropped by 2.7- million barrels in the week to February 21 to 256.4-million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1-million barrels to 138.5-million.

US crude oil stockpiles increased by 452,000 barrels to 443.3-million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected.

The crude market was also watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries (Opec) and its allies including Russia, a group known as Opec+.

Technical Indicators

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 10.70.

The projected lower bound is: 9.60.

The projected closing price is: 10.15.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 black 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 8.5404. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 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 30.72. 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 9 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 -142.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 2 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 9 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.210 at 10.190. Volume was 79% above average (neutral) and Bollinger Bands were 12% narrower than normal.

Open     High      Low     Close     Volume___
10.380 10.550 10.105 10.190 39,463,352
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 10.85 11.78 11.75
Volatility: 40 31 40
Volume: 29,579,428 22,534,838 26,110,634

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 13.3% 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 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 29 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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