Home Commodities United States Oil (USO) Snaps 5-Day Losing Streak

United States Oil (USO) Snaps 5-Day Losing Streak

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United States Oil (USO) Snaps 5-Day Losing Streak

Oil reversed five days of losses as the potential for an OPEC+ production cut overshadowed an uptick in U.S. crude inventories.

Futures climbed 2.3% in New York on Wednesday, gaining the most in a month. Oil markets earlier jumped more than 4% before easing gains as a meeting of OPEC+ officials in Vienna failed to reach a consensus on how to address the impact of the coronavirus. The group extended talks to a third day.

“There’s a lot of optimism in the market from OPEC showing they’re willing to play ball,” said John Zanner, senior strategist at Uplift Energy Strategy. “OPEC also has to balance supply disruptions from Venezuela to Libya and getting Russia to come on board, but the current optimism has some runway.”

Crude’s rebound was a reversal for bearish traders concerned the economic havoc wreaked by China’s coronavirus outbreak will translate into fuel-demand weakness.

A panel of technical experts from the Organization of Petroleum Exporting Countries and its allies weighed the impact of the crisis, with Saudi Arabia pushing for deeper oil-production while Russia favored an extension of the current deal.

In the U.S., prices barely reacted to an Energy Information Administration report that showed a bigger-than-expected rise in American crude inventories. The report also showed the first gasoline draw in 12 weeks.

West Texas Intermediate for March delivery gained $1.14 to settle at $50.75 a barrel on the New York Mercantile Exchange.

Brent for April settlement rose $1.32 to close at $55.28 on the London-based ICE Futures Europe exchange, putting its premium over WTI at $4.36.

Technical Indicators

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 11.69.

The projected upper bound is: 11.22.

The projected lower bound is: 10.12.

The projected closing price is: 10.67.

Candlesticks

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 26 white candles and 23 black candles for a net of 3 white 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 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 14.4928. 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 28.16. 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 20 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 -81. This is not a topping or bottoming area. The last signal was a buy 0 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 19 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed up 0.260 at 10.700. Volume was 88% above average (neutral) and Bollinger Bands were 110% wider than normal.

Open     High      Low     Close     Volume___
10.750 10.890 10.590 10.700 40,714,768
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 11.02 12.16 11.92
Volatility: 33 29 39
Volume: 31,123,486 20,093,000 25,943,400

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 10.2% 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 15 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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