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United States Oil (USO) state senators to talk crude markets with Saudi officials Saturday -source

United States Oil (USO) state senators to talk crude markets with Saudi officials Saturday -source

Republican U.S. senators who have introduced a bill that would remove U.S. defense systems and troops in Saudi Arabia unless it cuts oil output will hold a call with the kingdom’s officials on Saturday, a source familiar with the planning said on Tuesday.

Senators Kevin Cramer and Dan Sullivan will hold a call with the officials two days after a scheduled OPEC+ meeting in which Saudi Arabia and Russia are expected to agree an output cut. The two countries have been pumping oil flat out beginning last month in a race for market share.

The senators’ bill would remove U.S. troops, Patriot missiles and THAAD defense systems from the kingdom and put them elsewhere in the Middle East unless it cuts oil output.

The source, who spoke on condition of anonymity because of the sensitivity of the talks, said stabilization of global oil markets would be discussed but had no more details.

Analysts at ClearView Energy Partners said in a note to clients that the senators would likely reiterate their threats to withhold military support.

“If there is a deal, we would suggest that Saturday’s conversation could serve to reinforce decisions taken Thursday or Friday,” the note said. If there’s no deal, “the call could potentially catalyze further negotiations.”

The senators’ legislation faces an uncertain future as Senator James Inhofe, a senior Republican from oil-producing Oklahoma, has said he prefers to pressure Saudi Arabia and Russia by pushing the Department of Commerce to investigate whether they are excessively dumping oil onto global markets.

In addition, the U.S. Congress is not in session until at least April 20 and possibly longer due to the coronavirus outbreak, making quick action on the bill unlikely.

Threatening the defense relationship with Saudi Arabia, which is vulnerable to attacks from arch rival Iran without U.S. protection, has given the two senators an outsized role in Washington’s campaign to boost oil output.

Cramer is from North Dakota, which produces 1.4 million barrels of oil per day, second-most among U.S. states behind Texas. Sullivan is from Alaska, which produces about 480,000 bpd.

U.S. oil prices fell more than 9% to $23.63 a barrel on Tuesday on swelling crude supplies and weak fuel demand due to the economic effect of measures to control the coronavirus. The drop threatens heavily-leveraged U.S. oil companies with bankruptcies and layoffs. [O/R]

Trump has said he expects Saudi Arabia and Russia to take part in an output cut of 10 million to 15 million barrels per day from global markets. He also said U.S. producers have already cut production automatically as prices have dropped.

The Saudi embassy in Washington did not immediately respond to a request for comment.

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 7.90.

The projected upper bound is: 6.42.

The projected lower bound is: 3.52.

The projected closing price is: 4.97.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 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 72.4437. This is not an overbought or oversold reading. 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 38.98. 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 3 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 50. This is not a topping or bottoming area. The last signal was a sell 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 buy 6 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.390 at 5.090. Volume was 100% below average (consolidating) and Bollinger Bands were 18% wider than normal.

Open     High      Low     Close     Volume___
5.460 5.530 4.890 5.090 129,000
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 4.88 8.27 10.98
Volatility: 159 140 79
Volume: 146,601,360 73,528,688 37,099,968

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 53.6% 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 58 periods.

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