United States Oil (USO) US secretary of state Mike Pompeo tells the world to ‘err on the side of caution’ over buying oil from Iran
Oil prices surged to their highest level in six months on global commodity markets after the US said it would take a harder line against countries that breach its oil embargo on Iran.
Brent crude, which provides the benchmark for global oil prices, hit $74.70 a barrel on Tuesday morning while the lighter grade US West Texas intermediate rose to $66.31. The price of both slipped slightly later in the day.
In January the price of a barrel of Brent crude stood at just over $50, but has risen steadily ever since, mostly in response to growing concerns about the civil war in Libya.
Washington’s move to tighten sanctions against Iran came as a surprise to most analysts and traders, though the daily rise of less than 1% appeared to show that many accepted a promise by Saudi Arabia to increase output to stabilise prices.
Nevertheless shares in airlines fell and the value of oil producers Shell and BP rose as investors reacted to the prospect of oil prices increasing over the next few months.
US officials said the Trump administration would not renew any of the sanctions waivers granted to a handful of countries, including China, India, Turkey, Japan and South Korea, when the waivers expire on 2 May.
“Today I am announcing that we will no longer grant any exemptions,” Mike Pompeo, the secretary of state, said. “We’re going to zero. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits.B
Neither Pompeo nor senior state department officials would say whether sanctions would be immediately imposed on the affected countries on 3 May, if oil purchases continued.
Some analysts were sceptical that prices would plateau, and higher prices would feed into domestic inflation in the UK and other oil-importing countries.
“The Saudis aren’t rushing to fill what could be a substantial supply gap in the market,” said John Kilduff, a partner at New York-based Again Capital. “The market has gotten tight globally over the course of the last several months, primarily because of the efforts of Saudi Arabia.”
Before the reimposition of sanctions last year, Iran was the fourth-largest producer in the Organization of the Petroleum Exporting Countries (Opec) at around 3m barrels a day, but April exports have shrunk to below 1m barrels a day, according to tanker data and industry sources.
China, Iran’s largest customer with imports of about 585,400 barrels of crude oil last year, formally complained to Washington over the move, which a Chinese foreign ministry spokesman said “will contribute to volatility in the Middle East and in the international energy market”.
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 12.49.
The projected upper bound is: 14.29.
The projected lower bound is: 13.39.
The projected closing price is: 13.84.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 87.9746. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 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 74.94. This is where it usually tops. 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 7 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 220.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 0 period(s) ago.
Rex Takasugi – TD Profile
UNTD ST OIL FUND closed up 0.120 at 13.790. Volume was 25% below average (neutral) and Bollinger Bands were 5% wider than normal.
Open High Low Close Volume___
13.720 13.855 13.705 13.790 18,523,448
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 13.40 12.36 12.86
Volatility: 19 23 38
Volume: 17,772,296 20,051,984 24,901,350
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.
UNTD ST OIL FUND is currently 7.2% 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 moderate flows of volume into USO (mildly bullish). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 32 periods. Our momentum oscillator is currently indicating that USO is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
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