Venezuelan President Nicolas Maduro is facing growing pressure as the United States enforces sanctions on United States Oil (USO) exports

Venezuelan President Nicolas Maduro is facing growing pressure as the United States enforces sanctions on United States Oil (USO) exports

Venezuelan President Nicolas Maduro is facing growing pressure as the United States enforces sanctions on United States Oil (USO) exports

US sanctions came into effect Sunday to block Venezuela’s economic lifeline of oil exports, in what Washington hopes will be a major blow in its fledgling campaign to topple leftist President Nicolas Maduro.

As of 12:01 am Washington time (0401 GMT), the United States will take action against anyone who deals with state-owned Petroleos de Venezuela, or PDVSA, or any entity in which the company holds at least a 50 percent stake.

It is among a volley of steps by President Donald Trump’s administration to oust Maduro and install opposition leader Juan Guaido, who is recognized by more than 50 countries, including most in Latin America.

Just Friday, the Trump administration said it would block any US assets of Foreign Minister Jorge Arreaza, confirming it has no desire to negotiate with Maduro, a socialist firebrand who presides over a crumbling economy but has withstood three months of intense pressure.

Until the crisis, Venezuela exported 500,00 barrels a day to the United States, its largest customer, with PDVSA omnipresent, if not highly visible, through ownership of the Citgo refining and gas station chain.

The United States has already moved to put Citgo under the control of Guaido, who appointed his own board.

Even though sanctions legally came into force Sunday, “the reality is that the oil trade between the United States and Venezuela has been absolutely limited and fallen sharply,” said Mariano de Alba, a Washington-based international law expert from Venezuela.

But the sanctions will still have an effect, with Washington vowing to enforce them against any foreign company with interactions in the United States — including the US financial system, which dominates the globe.

As of Sunday, “there is no doubt that the sanctions are in force and that any company assumes bigger risks than they did before this date,” de Alba said.

Energy-hungry India was the third-biggest buyer of Venezuelan oil in 2017 after the United States and China and until recently had been a major source of cash.

But Indian companies have backed off in the face of US sanctions, making China and Russia the crucial economic and political backers of Maduro — whose re-election last year was widely criticized for irregularities.

The sanctions take effect just as global oil markets are trending higher after the United States similarly demanded that all countries, notably India and China, stop buying oil from Iran.

Oil is the blood of Venezuela’s crippled economy, accounting for 96 percent of exports.

The country nonetheless is facing a major economic crisis, with projections that inflation could soar to a mind-boggling 10 million percent this year.

Some 2.7 million Venezuelans have fled since 2015 faced with shortage of basic goods and medicine, according to UN figures.

One immediate problem for Venezuela is not its exports but its imports. It used to rely on 120,000 barrels of light crude each day from the United States to blend with its heavier oil. It will need to turn to other suppliers to sell its own crude, increasing production costs.

US-based consultancy Rapidan Energy Group says PDVSA’s production could temporarily fall by 200,000 barrels a day.

It would be a stunning further reduction for PDVSA which pumped 3.2 million a day in 2008, a figure that had nosedived to just 840,000 in March.

– Blaming Maduro –

The United States has wasted no opportunity to blame Maduro and his late predecessor Hugo Chavez for Venezuela’s economic woes — with Trump also trying to link their socialism to his Democratic foes at home.

Elliott Abrams, the US envoy leading the effort to oust Maduro, promised that “tens of billions of dollars” will flow into Venezuela to rebuild its economy.

“That recovery can only start when there is a fully inclusive government that represents all Venezuelans,” Abrams said Thursday.

But a study by two prominent left-leaning US economists, Mark Weisbrot and Jeffrey Sachs, warned that the growing sanctions will “vastly” harm ordinary Venezuelans.

The study, released by the Center for Economic and Policy Research, found that Venezuela recorded more than 40,000 additional deaths between 2017 and 2018 as they blamed sanctions for shortages of food and medicine.

“American sanctions are deliberately aiming to wreck Venezuela’s economy and thereby lead to regime change,” Sachs said.

“It’s a fruitless, heartless, illegal and failed policy, causing grave harm to the Venezuelan people.”

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 12.54.

The projected upper bound is: 13.62.

The projected lower bound is: 12.63.

The projected closing price is: 13.13.

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 25 white candles and 24 black candles for a net of 1 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 4 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

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 41.0257. This is not an overbought or oversold reading. The last signal was a sell 1 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 51.22. 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 sell 1 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 -107.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 1 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 1 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.440 at 13.090. Volume was 73% above average (neutral) and Bollinger Bands were 22% narrower than normal.

Open High Low Close Volume___
13.380 13.390 12.960 13.090 42,154,080

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

Moving Averages: 10-period 50-period 200-period
Close: 13.43 12.50 12.84
Volatility: 28 25 38
Volume: 18,933,512 20,302,586 25,038,808

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 gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 2.0% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 35 periods.

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