United States Oil (USO) surprise build in U.S. crude inventories

United States Oil (USO) surprise build in U.S. crude inventories

United States Oil (USO) surprise build in U.S. crude inventories

Oil prices dropped almost 1% on Wednesday following a surprise build in U.S. crude inventories, and as investors waited to see if a fresh round of tariffs by Washington on Chinese goods would come into force on Sunday. Brent futures settled at $63.72 per barrel, down 62 cents. West Texas Intermediate crude fell 48 cents to settle at $58.76 per barrel.

U.S. crude stockpiles rose unexpectedly last week, while gasoline and distillate inventories jumped sharply higher, the Energy Information Administration said. [EIA/S]

Crude inventories rose 822,000 barrels last week, compared with analysts’ expectations in a Reuters poll for a 2.8 million-barrel drop. At 447.9 million barrels, crude stocks were about 4% above the five-year average for this time of year, the EIA said.

However, stocks at the Cushing, Oklahoma, delivery hub for WTI fell 3.4 million barrels last week, their biggest decline since February 2018, the EIA said.

U.S. inventories of gasoline jumped 5.4 million barrels and distillates, which include diesel and heating oil, rose 4.1 million barrels – both more than double analysts’ expectations.

OPEC’s expectation of a small deficit suggests a tighter market than previously thought. It had initially projected a 2020 supply glut, but U.S. shale output has grown more slowly than expected.

However, U.S.-China trade tensions continue to cloud the outlook for demand, with a Dec. 15 deadline for the next round of U.S. tariffs on Chinese imports approaching.

OPEC and allied oil producers led by Russia last week decided to deepen supply cuts amid a weak outlook for oil demand growth next year.

But a bullish jolt that followed the agreement appears to have dissipated as demand concerns have emerged again, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

Technical Indicators

Overall, the bias in prices is: Upwards.

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

By the way, prices are vulnerable to a correction towards 11.66.

The projected upper bound is: 12.86.

The projected lower bound is: 11.79.

The projected closing price is: 12.32.

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 28 white candles and 22 black candles for a net of 6 white candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 73.0435. This is not an overbought or oversold reading. The last signal was a sell 0 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 58.61. 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 126 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 65. 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 3 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.090 at 12.300. Volume was 42% below average (neutral) and Bollinger Bands were 23% narrower than normal.

Open     High      Low     Close     Volume___
12.330 12.365 12.140 12.300 15,346,630
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 12.09 11.68 11.99
Volatility: 36 29 39
Volume: 19,268,466 22,263,298 25,856,944

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 2.6% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 bullish on USO and have had this outlook for the last 30 periods.

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