United States Oil (USO) U.S. government data showed domestic crude supplies declined

United States Oil (USO) U.S. government data showed domestic crude supplies declined

United States Oil (USO) U.S. government data showed domestic crude supplies declined

Oil prices gave up earlier gains Wednesday to finish a bit lower, after U.S. government data showed domestic crude supplies declined for a second week in a row, but by much less than the market expected.

The Energy Information Administration reported early Wednesday that U.S. crude supplies fell by 1.2 million barrels for the week ended Dec. 7. Supplies had also declined the week before, marking the first weekly decline in 11 weeks.

However, analysts and traders, on average, expected to see a larger decline of 2.8 million barrels in crude supplies, according to a survey conducted by The Wall Street Journal, while the American Petroleum Institute on Tuesday reported a drop of 10.2 million barrels.

The data on U.S. supplies come as the globe’s major producers prepare for a planned reduction in output early next year.

Last week, the Organization of the Petroleum Exporting Countries agreed to reduce its overall member production by 800,000 barrels a day from October’s levels for six months, beginning in the new year. The cartel didn’t specify the output cut by nonmember allies, which include Russia, but news reports peggedthe nonmember cuts at 400,000 barrels a day, to bring the total reduction to 1.2 million barrels a day.

In a closely watched monthly oil-market report released Wednesday, OPEC reported an 11,000 barrel-a-day decline in crude output last month, to average 32.97 million barrels a day. But production in Saudi Arabia, one of the world’s top-three producers and the biggest crude exporter, climbed by 377,000 barrels a day month-on-month, bringing Saudi output to a record 11.01 million barrels a day.

Crude prices saw some support earlier week from a supply outage in Libya. The country’s national oil company has declared force majeure on exports from the El Sharara oil field following an attack by a militia group over the weekend. Roughly 400,000 barrels a day of oil have come offline, according to analysts.

The oil market has seen overall volatility, with little clear price direction, as the announcement by OPEC and allies to cut production followed the more-than-30% plunge by oil prices by late November from a nearly four-year high hit in early October.

The EIA’s short-term energy outlook issued Tuesday forecast an average 2018 WTI price of $65.18 a barrel, down 2.4% from the November report’s forecast. It also cut its 2019 view by 16.4% to $54.19. For Brent, the EIA lowered its forecast by 2.3% to $71.30 in 2018 and by 15.2% to $61 in 2019.

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 12.67.

The projected upper bound is: 11.56.

The projected lower bound is: 9.87.

The projected closing price is: 10.72.

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 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 16 white candles and 32 black candles for a net of 16 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 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 27.4097. This is not an overbought or oversold reading. The last signal was a buy 8 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 35.16. 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 6 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 -27. This is not a topping or bottoming area. The last signal was a buy 8 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 -0.130 at 10.820. Volume was 2% above average (neutral) and Bollinger Bands were 5% narrower than normal.

Open High Low Close Volume___
11.070 11.130 10.790 10.820 26,275,982

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 10.93 13.14 13.69
Volatility: 47 44 35
Volume: 35,599,560 32,107,738 22,840,314

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 21.0% 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 39 periods.

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