Friday, July 15, 2016

Crude Oil (USO): Will It Or Won't It?

I commented earlier in the week on how terrible energy was shaping up to be. I might not have been right with regards to ETF Index funds that follow oil and gas companies, but I was with the index funds that follow the commodity. Crude Oil (USO) has been slipping pretty consistently over the last ten days with some wild swings of over 4%, but now I think it's time to see a proper retracement before this continues down again. The overall trend is down for crude oil regardless of what the news is from Nigeria but USO finds itself in a small bullish declining wedge and so I decided to remove some of my short positions in Crude and then short again when it reaches the moving averages or the upper resistance line of it's current channel.
This is generally in keeping with the oil and gas industry that appear poised to breakout of an ascending wedge. Looking at XLE, resistance is currently at $69.50 and any break above, no matter how short it might be, might take crude oil with it. On a macro scale the two are going in different directions with oil and gas companies rising and crude oil falling.