Oil 11 (Nov 17 - Jan 21)

[winston]

Oil: 64.30, +0.50. Up all week as oil continues its breakout run from mid-December.

[winston]

THIS FUND IS BREAKING OUT AS ENERGY RALLIES

Today, we see a fund benefiting from a recent surge in commodity prices...

As longtime DailyWealth readers know, commodities are incredibly cyclical. If you catch one of these big cycles at the wrong time, you could lose a fortune. But the opposite is also true.

And right now, we're seeing a powerful uptrend in one of the world's most essential commodities – crude oil...

The United States Oil Fund (USO) is the largest crude oil exchange-traded fund in the U.S. It tracks the daily performance of West Texas Intermediate ("WTI") crude – the American benchmark for prices.

High supply has crushed oil prices in recent years. But OPEC and other producers are cutting production...

And in November, they agreed to continue the cuts through the end of 2018. Now, oil prices are breaking out – and USO has followed suit.

As you can see in the chart below, shares have soared around 47% from their June lows. They recently hit new multiyear highs. If oil prices keep climbing, watch for this rally to continue...

Source: Daily Wealth

[winston]

Oil: 63.31, -0.58.

Still in a weeklong test of the 10 day EMA, consolidating that good rally.

[winston]

Why Oil Could Fall to Around $50 a Barrel

By CARLEY GARNER

1. Danger: Oil Speculators are Very Long

Big speculators were holding 660,000 net long contracts -- the largest bullish position in the history of oil futures. Similarly, commercial hedgers were holding one of the largest oil hedges in history.

2. The Dollar Has Helped Oil ... But Might Not Keep Doing So

3. Oil's Technicals Point to a Pullback

Source: The Street

https://realmoney.thestreet.com/article ... yptr=yahoo

[winston]

The No.1 Challenge To The Oil Rally

by Nick Cunningham

The oil price rally could get derailed by “explosive” growth from U.S. shale in 2018, and “substantial gains” in Canada and Brazil will also add to the supply woes.

The rally in Brent prices to $70 was driven in part by some unexpected interruption and geopolitical tension, including the possible unraveling of the Iran nuclear deal, the closure of the Forties pipeline a few weeks back, disruption in Libya, and the steep decline in Venezuela’s oil production.

Inventories also continue to decline (for the time being), and even picked up pace at the end of last year. The IEA said that OECD commercial stocks declined by 17.9 million barrels in November, a pace that was twice as fast as the five-year average. And, in December, preliminary data suggests the declines were even stronger.

However, soaring supplies from the U.S. and other non-OPEC countries threaten to stall the rally. The IEA raised its forecast for U.S. oil production growth this year from 870,000 bpd to 1.1 million barrels per day (mb/d).

“The big 2018 supply story is unfolding fast in the Americas. Explosive growth in the US and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico,” the IEA wrote.

“It is possible that very soon US crude production could overtake that of Saudi Arabia and also rival Russia’s.” Russia produces more than 11 mb/d. The U.S. EIA predicted earlier this month that the U.S. would top 11 mb/d by the end of 2019.

OPEC pegged demand growth at a healthier 1.5 mb/d, but even that figure is swamped by the 1.7 mb/d of new supply.

The result could be a return to increases in inventories, testing the current rally in prices.

Source: Oilprice.com

https://finance.yahoo.com/news/no-1-cha ... 00463.html

[winston]

Three Wild Cards That Could Hurt The Oil Rally

by Kent Moors

Wild Card #1 – U.S. Production
Wild Card #2 – The Dollar
Wild Card #3 – Short Contracts

Source: Oilprice.com

https://finance.yahoo.com/news/three-wi ... 00681.html

[winston]

Oil: 66.14, +0.63.

After testing back to the 10 day EMA for a week, oil broke higher once more, closing at a new rally closing high.

Source: Investment House

[winston]

Oil Outlook

by Henry Chan

As expected, oil is rising on solid fundamentals. In addition to a subtle decline in world oil reserve life, demand in the US has soared to 20 million barrels per day, depleting petroleum stocks to 1.9 billion barrels from a historic peak of more than 2 billion barrels. In terms of inventory life, supply has shortened to 90 days from 113 days.

Oil prices are poised to fall but the plunge should be cushioned by global demand and shrinking rig supply.

Moreover, new well output among US shale oil producers has shown signs of erosion. Alarmingly, production at existing wells has been falling at a rapid rate.

A drop in the contracted shale rig count and a rise in the number of unfinished shale oil wells implies that the low hanging fruit has already been taken, and that new resources will be sourced from harder to access fields.

Oil producers do not see high output growth any more, and so are not motivated to develop more new wells.

That means shale oil production may slow sharply by the end of the year.

However, world oil demand this year may gain by more than 1 million barrels per day, outpacing gains in refinery capacity. In summary, further gains in oil prices shouldn’t be ruled out.

For crude oil futures traded on Nymex, commercials, made up of producers and merchants, are long 800,000 contracts, a level that has historically warned of a peak oil price. They seem to be hesitant to increase their longs beyond threshold.

However, their counterparts, the commercial shorts, have literally gone through the roof, hitting some 1.4 million contracts.

Producers and merchants are those who use oil, who really understand oil, so that means both crude oil users and producers are now extremely cautious of the oil price. A correction is probably due, but sound fundamentals will cushion any downside shock.

Source: SCMP

[winston]

Oil: 61.55, +0.38.

Rebounded Wednesday to Friday, moving just past the 50 day MA's.

Rebounded, but it was a sharp break lower.

Key is whether it can hold the move, rest, then continue higher.

Source: Investment House

[winston]

Oil: 63.55, +0.78.

Oil moved higher Thursday and Friday after a pause at the 50 day EMA on its recovery move.

Not bad action after testing the November/December consolidation.

Source: Investor Place