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Oil Term Structure Favors Higher Prices

  • Crude oil continues to take the stairs to new highs

  • Term structure tightens- Bonus time for the front-to-back crowd

  • Brent-WTI rises- More gains on the horizon as US production declines

  • Upside targets for crude oil in 2021

A commodity's market structure provides clues about the path of least resistance of the price. I view commodity fundamentals as a jigsaw puzzle with many moving pieces. Term structure and location and quality spreads are puzzle pieces that can form a picture of supply and demand dynamics.

Term structure is the forward curve or the price differentials for delivery at different periods. Contango, or a deferred premium, tends to signal equilibrium or oversupply conditions. Backwardation, or a deferred discount, often points to tight supplies or a fundamental deficit. The crude oil market tends to swing from contango to backwardation during its price cycles.

A location spread is the price differential for delivering a commodity in one area of the world versus another. A quality spread reflects different grades, compositions, or forms, of the same commodity. The price differential between Brent North Sea crude oil and West Texas Intermediate crude oil, the two global pricing benchmarks, is a combination of a location and a quality spread in the petroleum market.

The United States Crude Oil Fund (USO) and the United States Brent Crude Oil Fund (BNO) are ETF products that track the two leading petroleum standards' prices.

Crude oil continues to take the stairs to new highs

Since November 2, crude oil has been on a steep staircase to the upside.

Source: CQG

As the daily chart of February NYMEX futures highlights, the energy commodity rose from a low of $34.50 to its most recent high of $53.93 or 56.3% over the past eleven weeks.

Nearby futures settled last week at $52.36 but ended on a bearish note as the price fell on January 14.

Term structure tightens- Bonus time for the front-to-back crowd

Term structure in the crude oil market flipped from the contango or a forward premium to backwardation or a deferred discount late last year.

Source: CQG

The chart of WTI crude oil for delivery in February 2022 minus February 2021 shows that contango reached a high of $5.15 per barrel in late April 2020. The nearby contracts experienced a far higher level of contango or deferred premium as the May futures contract price fell below zero. The February 2021-February 2022 spread fell into backwardation in late November as the oil price moved higher. At the end of last week, it was trading at a $2.20 per barrel backwardation after reaching a low of $3.33 on January 8 and $3.32 on January 14.

The term structure displays tightness or supply concerns in the crude oil market. The move from contango to backwardation created substantial profits for the front-to-back crowd that bought nearby crude oil futures, took delivery, and stored the energy commodity when the contango reached wide levels in March and April 2020. At the same time, they sold crude oil futures for deferred delivery. The move into a backwardation creates the opportunity to unwind the spread by selling the oil in storage at a premium to the price required to close out the deferred short position.

Meanwhile, concerns that US production will decline under a far stricter regulatory environment under the Biden administration is causing the supply concerns that led to the current backwardation. The spread between the crude oil for delivery in February 2023 compared to February 2021 stood at $3.94 back as of January 15. Supply concerns have shifted the crude oil market's term structure over the past months.

Brent-WTI rises- More gains on the horizon as US production declines

The price differential between Brent North Sea and West Texas Intermediate petroleum, the two benchmarks widened since late September. Brent is a seaborne crude oil that is the pricing benchmark for two-thirds of the world's crude oil produced in Europe, Africa, and the Middle East. WTI is the American crude oil for delivery at a pipeline in Cushing, Oklahoma. WTI is the pricing standard for around one-third of the world's petroleum. The different delivery points make the spread between the two a location spread.

When it comes to quality, Brent has a higher sulfur content than WTI, making it a preferable grade of the energy commodity for processing into distillate fuels like heating oil, diesel, and jet fuels. WTI is lighter and sweeter, making it the oil that is easier to refine into gasoline. The Brent-WTI is a location and a quality spread, but it is more. Since the Middle East can be politically turbulent, the spread also serves as a political risk spread for the energy commodity.

Source: CQG

The weekly chart shows that after reaching a 78 cents premium for Brent in late September, the discount for WTI moved to $2.72 at the end of last week. Over the past years, concerns about Middle East supplies caused the Brent premium to rise.

The recent surprise one million barrel per day production cut from Saudi Arabia pushed the spread to a higher Brent premium. Over the past decade, a rising Brent premium was typically bullish for the price of crude oil. In 2011 as the Arab Spring threatened Mid-East political stability, Brent rose to a $27.64 premium to WTI, and the price of nearby NYMEX crude oil futures rose to over $100 per barrel. Meanwhile, that dynamic could change in the coming months and years.

A dramatic shift in US energy production under the incoming administration could push US output lower, putting upward pressure on the price of WTI compared to Brent. Therefore, the crude oil price could move higher even if Brent moves to a discount to WTI over the coming months. Meanwhile, Iran remains a threat to peace in the Middle East. Any hostilities that impact production, refining, or logistical routes in the area that is home to half the world's oil reserves could put upside pressure on nearby crude oil and the Brent premium over WTI.

Upside targets for crude oil in 2021

The technical targets on the upside stand at the February 2020 high of $54.50 and the January 2020 peak of $65.65 per barrel. The last time NYMEX crude oil futures traded over the $100 level was in 2014. On the way to the century mark, there would be technical resistance at the 2020 highs and $76.90, the peak from 2018.

Crude oil is a volatile commodity that takes the stairs higher during rallied and an elevator shaft to the downside during corrections, as we witnessed in April 2020. The energy commodity was on the staircase at the start of 2020.

The crude oil market could face an almost perfect bullish storm in 2021. Herd immunity to the coronavirus will increase energy demand, and the world continues to depend on fossil fuels. US output is likely to decline as energy policy shifts to a greener path. The value of the US dollar and all fiat currencies are trending lower under the weight of liquidity and stimulus causing the money supply to expand and deficits to rise. Inflationary pressures are building, which is bullish for all commodities, including crude oil.

At the beginning of 2021, two pieces of the crude oil market's structure point to higher prices. The tightening trend in the term structure and a rising Brent premium have been bullish over the past decade. The path of least resistance of crude oil continues to be higher as of January 15. However, the risk of a correction will increase with the price of the energy commodity.

Want More Great Investing Ideas? 9 "MUST OWN" Growth Stocks for 2021 5 WINNING Stocks Chart Patterns 7 Best ETFs for the NEXT Bull Market
The United States Oil Fund (USO) was trading at $35.83 per share on Tuesday morning, up $0.49 (+1.39%). Year-to-date, USO has gained 8.54%, versus a 0.96% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #73 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO January 19, 2021 11:03am

Crude Oil Reaches $50, Bullish Trend Confirmed

  • A surprise "gift" from Saudi Arabia on January 5 pushes crude oil through $50

  • The Georgia runoff election result is bullish for crude oil

  • The technical levels to watch for as crude oil continues to take the stairs higher

2020 was a rough year for the crude oil market. As the energy demand plunged during the global financial crisis, the price of NYMEX WTI and ICE Brent North Sea crude oil futures dropped. WTI and Brent are the two pricing benchmarks for petroleum. Approximately one-third of the world's producers and consumers use the WTI price while two-thirds price output and requirements on Brent's price. Nearby WTI futures fell to a record low of negative $40.32 on April 20, 2020, as there was no capacity to store the landlocked oil. WTI had not traded below zero since NYMEX introduced futures in the early 1980s. Brent declined to its lowest price this century when the price hit $16 per barrel in late April. Brent is seaborn crude, allowing for storage on ocean tankers.

Since then, prices have recovered. Brent moved back the $50 per barrel level in December, and WTI reached the half-century mark on January 5. The United States Crude Oil Fund (USO) tracks the price of a portfolio of NYMEX WTI futures. The United States Brent Oil Fund (BNO) follows Brent's price higher and lower.

A surprise "gift" from Saudi Arabia on January 5 pushes crude oil through $50

On January 5, Saudi Arabia shocked the crude oil market. After agreeing to a 500,000 barrel per month tapering the 7.7 million barrel per day production cut starting in January 2021, the Saudi Arabian oil minister announced his country would cut output by one million barrels per day as a "gift" to the other world producers. The move allows Russia to increase its production. Nearby NYMEX crude oil futures moved above the $50 per barrel level for the first time since February 2020 on January 5. After trading to a high of $52.75, the nearby futures settled at $52.24 per barrel.

Source: CQG

The daily chart of February futures shows the rise from $34.50 on November 2 to the most recent high of $52.75 per barrel on January 8, after the Saudis surprised the market with a substantial production cut.

The Georgia runoff election result is bullish for crude oil

The timing of the Saudi's move was fascinating as it came on the day of a pair of runoff elections in Georgia that determined the Senate's balance of power. Democrats favor a cleaner and alternative path towards energy and a shift from fossil fuel production. Republicans have advocated for energy independence through fewer regulations. On January 6, two Democrats defeated incumbent Republicans by razor-thin margins that flipped control of the Senate from Republicans to Democrats. Among many other policy issues, the energy was on the ballot in Georgia on January 6, and climate change advocates won. President-elect Biden's initiatives will now have a far easier path through the legislature.

US energy policy will shift to the left with stricter regulations for extracting hydrocarbons from the earth's crust. The bottom line is that US energy production will decline in the coming years as increased regulation will raise the production cost and impede output. Crude oil output rose to a record high of 13.1 million barrels per day in March 2020. That level is now likely to stand as a high for the foreseeable future.

Meanwhile, vaccines that create herd immunity to the coronavirus are likely to increase energy demand in the coming months. As US production falls under the Biden administration's agenda, the pricing power is likely to shift to OPEC and Russia. Saudi Arabia may have revealed their plans to boost the price of the energy commodity in the coming months. For the oil cartel members and Russia, the mission is the highest possible price for petroleum. Crude oil recovered from the April 2020 low when it fell below zero for the first time. The NYMEX contract reached $30 in May, $40 in June, and $50 per barrel in January. The trend has been higher over the past nine months. At the end of 2020, crude oil put in a bullish pattern on the long-term chart.

Source: CQG

The quarterly chart highlights that crude oil futures put in a bullish reversal in Q4 2020 and has followed through on the upside during the first week of January.

The technical levels to watch for as crude oil continues to take the stairs higher

As the crude oil price continues to appreciate, the path of least resistance remains higher. A falling dollar, the prospects for declining US production now that the government is in lockstep with a greener agenda, and the potential for increased global demand as the coronavirus's threats recede all point to higher prices. Moreover, central bank liquidity and government stimulus are inflationary and extremely bullish for the price of all commodities, including crude oil. The latest move by Saudi Arabia exacerbates the bullish fundamentals.

Source: CQG

The next technical resistance level stands at the mid-February 2020 $54.50 high. Above there, the early January 2020 peak of $65.65 is the next upside target. In 2018, NYMEX futures hit a high of $76.90, and the last time crude oil was above $100 per barrel was in mid-2014. Support stands at $33.64, the early November low.

Crude oil tends to take the stairs higher and an elevator shaft to the downside during corrections, as we witnessed in early 2020. At the start of 2021, the energy commodity is on the staircase, and higher prices look like the path of least resistance.

Want More Great Investing Ideas? 9 "MUST OWN" Growth Stocks for 2021 5 WINNING Stocks Chart Patterns 7 Best ETFs for the NEXT Bull Market
The United States Oil Fund (USO) rose $0.48 (+1.36%) in premarket trading Tuesday. Year-to-date, USO has gained 8.03%, versus a 1.28% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #72 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO January 12, 2021 9:44am

Gold Confirms Bullish Trend

It's been a busy past month for major asset classes, and while Q4 was mostly a quarter to forget, both gold (GLD) and silver (SLV) managed to finish the year strong.

This was a significant positive development because gold had a pivot of $1,700/oz to confirm its yearly breakout, and this level was briefly under pressure during the depths of the correction during Q4. Fortunately, the close well above this pivot level has further increased the probability that we are in a new bull market, and the first all-time high in a new bull market is rarely the last. This suggests that we are likely still in the early innings of a new precious metals bull market, and this will remain the case as long as gold remains above $1,700/oz on a yearly closing basis. Let's take a closer look below:

Chart, histogram Description automatically generated

(Source: TC2000.com)

As shown in the chart above, the yellow metal has gone nowhere for nearly a decade following a gruesome bear market in 2012 through 2015, which nearly cut the metal in half.

However, we finally saw a range expansion, which was confirmed with the yearly close above $1,700/oz in 2020, translating to a new all-time high yearly close for the metal. Many critics seem to have jumped in the bear camp for gold, and continue to point out that gold miners (GDX) are terrible investments simply due to past biases and more than a decade of poor returns. However, the same was said about many asset classes in the past, and every asset class has its decade of under-performance.

The great thing about these 'lost' decades is that they grind down bullish sentiment to a pulp so that when new highs finally do show up, most of the public isn't interested. Let's look at a few examples below:

Chart, histogram Description automatically generated

(Source: TC2000.com)

As shown in the chart above, the S&P-500 (SPY) had a lost decade between 2001 and 2012, with the market going nowhere and suffering two major secular bull markets. When the market finally broke out in 2013, many had proclaimed that this was simply a triple-top and a test of a major resistance level, and this was the wrong time to be piling into the market.

However, as the chart shows above, this was actually the top of the 1st inning of a new secular bull market, which would see the SPX gain 100% over the next six years. While this might not seem like much, this 100% return for the S&P-500 translated to a more than 1000% return for several leading stocks in the same period.

Chart, line chart Description automatically generated

(Source: TC2000.com)

We heard similar arguments in 2012 for the Russell 2000 (IWM), with the index being one of the hardest-hit indexes during the 2007-2009 bear market, plunging 60% from its highs. However, the all-time high in late 2012 was a very bullish signal for the index, suggesting that the landscape was finally changing, and discussions of how poor the historical 10-year return was at the time were irrelevant.

It's important to note that while these arguments for poor long-term performance do hold weight until an index proves itself and makes a new all-time high, they hold zero weight once that new all-time high is made and confirmed by a yearly close. This is because there is clearly a positive change in the fundamentals to bring on this new all-time high. This typically shows up in price action first, with the smart money looking forward to either a brighter economy or a brighter fundamental outlook.

Chart, histogram Description automatically generated

(Source: TC2000.com)

Three years ago, it was difficult to get anyone to discuss clean energy positively, and many were still on the oil bandwagon (USO) despite a devastating bear market in 2014 through 2016. However, the Cleantech Portfolio ETF (PBW) broke to new all-time highs after doing nothing since its inception and rose an incredible 100% in less than three years. This all-time high was signaling a positive change in the fundamentals and the fact that it was time to be open-minded to beginning to start positions in this area.

Chart, histogram Description automatically generated

(Source: TC2000.com)

The last example worth noting is palladium (PALL), gold's more expensive cousin, that broke out of a massive decade-long base in 2017. As shown above, the metals tend to see super-charged returns when they break out of these massive bases, and the Palladium ETF was no exception.

In fact, the metal soared 250% in less than three years from its breakout, and the worst possible thing to do at this all-time high was to be skittish or bearish. Just because an asset class has had a difficult time with a level in the past or has a poor 10-year return is zero reasons to be negative on it. Still, many generalist investors continue to poo-poo gold due to recency bias.

Graphical user interface, chart Description automatically generated with medium confidence

(Source: Daily Sentiment Index Data, Author's Chart)

As should be clear from the above examples, all-time highs from near decade-long consolidations are very bullish, and gold's breakout last year achieved precisely this feat. The fact that bullish sentiment remains at barely 50% despite this massive breakout is a gift for investors because it suggests that only a small group of investors are actually bullish on the metal.

While sentiment did soar to 90% bulls in August when the trade was crowded, the 15% correction in the metal has wiped out much of this bullish sentiment. Meanwhile, given that gold is less than 10% above its previous all-time high, and all the above examples achieved a 100% return within six years, we can confirm that gold likely has quite a bit of gas left in its tank long-term.

Obviously, there's no guarantee that gold performs similarly to the examples above, with the average return from the all-time high breakout over the first three years being above 75%. Even if we are conservative and cut the average return within three years from the breakout in half, we come up with an average return of 37% between now and August 2023.

This would translate to a gold price near $2,650/oz, and margins for major gold miners above 60% based on average all-in sustaining costs of $1,000/oz. This would translate to a 200 basis-point improvement from current levels, with most mining companies currently working with average margins of 40%. Therefore, there's a case to be made for both miners and gold in a portfolio with the new all-time high breakout recently confirmed.

While it's never that easy to buy all-time highs, the above charts should provide comfort that all-time highs are actually quite bullish, with assets rarely re-entering their base after multi-year breakouts. Given the recent breakout through $1,900/oz, the initial price target for this breakout is $2,350/oz, with a potential for $2,700/oz by 2023 if the $2,350/oz target is met. Based on this enormous upside based on conservative technical targets, I remain bullish for gold even after last year's sharp increase. I believe that this is similar to the rare opportunity the S&P-500 offered in 2013 to get long at a major breakout area.

Given the metal's long-term bullish outlook, I would view any pullbacks below $1,850/oz as opportunities to add to one's position, and I continue to see a case for accumulating best in breed gold miners like Kirkland Lake Gold (KL) and Newmont (NEM).

Disclosure: I am long GLD, NEM, KL

 Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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The SPDR Gold Shares (GLD) was trading at $179.49 per share on Thursday afternoon, down $0.41 (-0.23%). Year-to-date, GLD has gained 0.63%, versus a 1.27% rise in the benchmark S&P 500 index during the same period. GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #10 of 35 ETFs in the Precious Metals ETFs category.

About the Author: Taylor Dart

taylor-dartTaylor has over a decade of investing experience, with a special focus on the precious metals sector. In addition to working with ETFDailyNews, he is a prominent writer on Seeking Alpha. Learn more about Taylor’s background, along with links to his most recent articles. More...
NYSE:GLD January 7, 2021 1:35pm

Exciting 2021 On The Horizon for Crude Oil

  • An over $100 trading range in nearby NYMEX futures in 2020

  • Lots of price action ahead in 2021

  • The US and global politics could light a bullish fuse

  • The financial landscape is bullish for crude oil, but it could be another wild ride

2020 was anything but a dull year in the crude oil markets. The year began with prices reaching the peak in early January when the US and Iran faced off in Iraq after the killing of a high-profile Iranian military commander. Energy demand evaporated as the global pandemic closed down broad parts of the worldwide economy in February through April, sending the price of NYMEX crude oil futures into negative territory for the first time in history. Brent futures fell to the lowest level of this century.

Like the stock market, crude oil tends to take the stairs higher and an elevator shaft to the downside during corrections and bear markets. The price of nearby WTI NYMEX and Brent ICE futures are heading into 2021 on either side of $50 per barrel. While the price range in 2020 will be a challenge to replicate, the energy commodity is likely to experience lots of volatility in 2021.

The United States Crude Oil Fund (USO) replicates the price action of a portfolio of NYMEX WTI futures. The United States Brent Crude Oil Fund (BNO) tracks the price action in a portfolio of ICE Brent futures.

An over $100 trading range in nearby NYMEX futures in 2020

The crude oil futures market mirrored the pulse of markets in 2020. During the first week of trading in January 2020, the price of nearby NYMEX futures rose to the highs of 2020 at $65.65. The faceoff between the US and Iran in Iraq after the killing of a top Iranian military commander ignited supply concerns that sent the price of crude oil to a peak. As the confrontation did not accelerate, the price settled back, causing crude oil to make lower highs and lower highs through mid-February when the bottom fell out of the market. On April 20, a crescendo of selling sent the energy commodity below zero and a record low.

Source: CQG

The weekly chart highlights the $105.97 trading range in NYMEX WTI crude oil futures in 2020. The energy commodity fell to a low of negative $40.32 per barrel on April 20. WTI is a landlocked crude oil with a delivery location at a pipeline in Cushing, Oklahoma. At the beginning of the global pandemic, demand evaporation caused those holding long positions in the expiring May futures contract with no options to store the energy commodity. Therefore, the nearby contract became a bearish hot potato with longs selling at any price as taking delivery was not possible. Margin calls as the price dropped caused force liquidations of futures positions.

Since the low, crude oil has taken the stairs higher, with a few speedbumps along the way. The price settled at the $48.52 per barrel level on December 31, 2020, $88.84 above the year's low and $17.13 under the 2020 peak.

As we head into 2021, the total number of open long and short positions in the NYMEX futures arena was at the 2.155 million contract level. At the end of 2019, the metric was only a little lower at 2.146 million.

Weekly price momentum and relative strength indicators were well over neutral readings with momentum in overbought territory. The metrics were in the same position as at the end of 2019 on the final trading session of 2020. Weekly historical volatility at 37.8% on December 31, 2020, was higher than at the end of the previous year when it was around the 20% level.

Lots of price action ahead in 2021

Like many commodities, crude oil tends to take the stairs higher and an elevator shaft lower during bear market corrections. Rallies can take months; violent corrections often occur in the blink of an eye, as we witnessed in Aril 2020. We are moving into 2021 on a staircase higher threatening to challenge the $50 level on the nearby NYMEX futures contract.

In 2020, the unforeseen event, a global pandemic, caused the demand to evaporate, leading to the most substantial price volatility in history for the energy commodity. Any significant moves in 2021 will likely come from an event that hits the market out of the blue. The unknown always tends to ignite the most substantial price variance in crude oil and markets across all asset classes.

Meanwhile, the landscape of "knowns" going into 2021 is mostly bullish for the price of the energy commodity.

The US and global politics could light a bullish fuse

Politics in the US and worldwide look to be a supportive factor for the oil market in the new year. In the US, the incoming Biden administration has pledged to increase alternative and renewable energy sources and decrease fossil fuel output.

The January 5 runoff Senate elections will determine the Senate's balance of power and the extent of the US energy policy shift. However, the Biden administration will rejoin the Paris climate accord, increase regulations on energy producers, limit fracking and other extraction techniques, and push production costs higher. US crude oil output reached a record 13.1 million barrels per day in March 2020.

The upcoming shift in energy policy will cause production to decline. The March 2020 peak in output will stand as a record for the foreseeable future. OPEC+ will continue to taper their production cuts as the worldwide economy improves. However, the decline in US output will cause the cartel to do its utmost to achieve the highest price for its members. A move away from hydrocarbon production in the US will hand pricing power back to OPEC, the cartel controlled by Russia and Saudi Arabia.

While the Biden administration will support moves to reestablish the Iran nuclear nonproliferation agreements, it could be a goal that is too far to reach. The assassination of Iran's top nuclear scientist has increased tensions.

Moreover, the recent warming of relations between Israel and many Arab nations is an affront to the Iranian theocracy. Iran and Saudi Arabia remain mortal enemies. Any hostilities that impact production, refining, or logistical routes in the Middle East could cause sudden rallies. While crude oil tends to take the elevator to the downside, events that threaten Middle East supplies can drive the elevator to move higher. The Middle East remains home to more than half the world's crude oil supplies.

The US and geopolitical landscape for crude oil are mostly bullish going into 2021.

The financial landscape is bullish for crude oil, but it could be another wild ride

There may be nothing more bullish for all commodity prices than the financial landscape going into the new year. If the period from 2008 through 2011 is a model for 2020 and the coming years, explosive rallies in commodity markets could be on the horizon. Following the 2008 global financial crisis, central banks and governments unleashed unprecedented liquidity, pushed interest rates to historic lows, and stimulated economies via bailouts and other fiscal policy tools.

While the 2020 pandemic was a far different crisis than in 2008, the central banks and governments used the same tools to encourage spending and borrowing and inhibit saving. The only difference is that the amount of monetary and fiscal stimulus in 2020 was far higher than in 2008. As an example, the US Treasury borrowed a record $530 trillion from June through September 2008. In May 2020, it borrowed $3 trillion. The latest stimulus program promises more borrowing in 2021.

The price tag for the tidal wave of liquidity and tsunami of stimulus is inflation. The increase in deficits and the money supply is fertile ground for inflationary pressures, which push commodity prices higher. After the 2008 financial crisis, commodity prices rose to multi-year or all-time highs by 2011 and 2012. With the level of monetary and fiscal programs higher in 2020, why should we expect any different market response over the coming years?

Many signs point higher for the crude oil market in 2021. However, as we have learned over the past years, the unknown can move the price the most. Bull markets rarely move in a straight line. I would be a buyer of crude oil on price weakness but will have my eyes open for those unexpected events that can change the landscape for the path of least resistance of prices. If 2020 taught us anything, it is always to expect the unexpected in markets.

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The United States Oil Fund (USO) was trading at $33.25 per share on Monday morning, up $0.24 (+0.73%). Year-to-date, USO has gained 0.73%, versus a 0.11% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #70 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO January 4, 2021 10:15am

Shifting Dynamics Should Lead to Gains in 2021 for Crude Oil

  • Shifting energy dynamics

  • Crude oil is still the king of the energy sector

  • Bullish short-term- Politics will create volatility in 2021

Many markets tend to take the stairs higher and an elevator lower. In the stock market, the reason the VIX index often rallies during corrective periods. The VIX reflects the prices of put and call options on the S&P 500 stocks. Market participants tend to buy options, or price insurance, when the market is falling, forcing the VIX higher. The stock market is one example of this phenomenon, and the world's most liquid commodity, crude oil, is another.

At the beginning of last week, we witnessed another example of how crude oil takes the elevator to the downside during price corrections. The price had been on the staircase to the upside since reaching a low of $33.64 per barrel on the nearby NYMEX futures contract on November 2. The price moved to a high of over $49 on Friday, December 18.

On December 21, the energy commodity got back on the elevator and fell below the $47 level after January NYMEX futures rolled to February. The winter months tend to be a seasonally weak period for crude oil. As we move into 2021, we should continue to expect volatility in the crude oil futures arena. While the world looks to move away from fossil fuels, petroleum will still provide energy for the coming years.

A shift in dynamics may only exacerbate the price volatility in the coming year. The United States Oil Fund (USO) tracks the NYMEX crude oil futures' price higher and lower.

Shifting energy dynamics

On January 20, 2021, Joe Biden will become the forty-sixth President of the United States. President-elect Biden pledged to address climate change during the campaign. His administration will rejoin the Paris climate accords. US energy policy will shift from the drill-baby-drill and frack-baby-frack environment under President Trump to a far stricter regulatory atmosphere over the coming years. Progressive Democrats are likely to push the incoming President towards policies that would cause US crude oil and natural gas output to decline. Rising costs and limits or even bans on fracking will cause production to fall.

Over the past years, US crude oil production surpassed Russian and Saudi Arabian output as it rose to a record 13.1 million barrels per day in March 2020. We are likely to see that record stand for a long time given the US energy policy shift under the Biden administration. The extent of the change depends on the upcoming January 5 runoff elections in Georgia that will determine the Senate's balance of power.

A victory by Democrats would create clear sailing for the incoming President's initiatives. If Republicans maintain control of the Senate, the administration will need to compromise, limiting the energy policy change. In either case, some of the pricing power in the crude oil market will revert to OPEC+, handing Russia and Saudi Arabia more influence over the future path of petroleum prices. Since the leading producers have a vested interest in higher prices, we should expect them to follow production policies that encourage rising oil prices.

Crude oil is still the king of the energy sector

While the Biden administration will encourage less oil production and consumption, crude oil remains a critical energy source for cars, planes, trucks, ocean vessels, heating, and other requirements that power the US and countries worldwide.

It will take years, if not decades, to shift to alternative energy sources and abandon fossil fuels. China and India, the world's most populous nations, with over one-third of the world's people, continue to consume crude oil. A shift in US energy policy will not materially impact the fundamental equation's demand side in the near-term. Still, it will affect the supply side if production drops significantly.

The US briefly became the crude oil king during the Trump administration, but the crown looks likely to pass to Russia and Saudi Arabia, given the shift in energy policy under the incoming administration. As the global population continues to rise, the energy demand will move higher. We could see higher oil prices over the coming years, and crude oil is heading into 2021 in a bullish trend.

Bullish short-term- Politics will create volatility in 2021

The move to a negative price for crude oil in late April was an outlier, created by the global pandemic.

Source: CQG

Since then, we have seen the oil futures market make higher lows and higher highs. The most recent peak came on December 18 when the nearby February NYMEX futures contract reached a high of $49.43 per barrel. The February Brent contract reached a peak of $52.47.

Crude oil tends to take the stairs higher and an elevator lower. Another elevator ride is always possible, but the trend remained higher as of December 24.

The crude oil futures market put in a bullish reversal on the monthly chart in November. The price traded below the October low and closed November above the previous month's high.

Source: CQG

A close above $43.78 on the nearby NYMEX futures contract on December 31 would create a bullish reversal on the quarterly chart going into 2021. Expect lots of volatility in the oil market during the coming year. A shift in US energy policy, a falling dollar, and rising inflation because of monetary and fiscal policies could turn out to be a potent bullish cocktail for the energy commodity that continues to power the world for the coming year. Brewing tensions with Iran is another factor that could lift the price of the energy commodity in 2021 just as it did in early 2020.

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The United States Oil Fund (USO) rose $0.18 (+0.55%) in premarket trading Monday. Year-to-date, USO has declined -67.80%, versus a 17.67% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #69 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO December 28, 2020 9:26am

Crude Oil Facing Short-Term Headwinds

  • Crude oil rises to its highest price since early March

  • Resistance at the half-century mark in NYMEX crude oil futures

  • Inventory data is not bullish- Tightness in the forward curve

  • An end to the pandemic is bullish, and so is the path of US energy policy

As of the end of last week, the continuous NYMEX WTI crude oil contract continued to rise from the ashes as it recovered by nearly $90 per barrel after falling far below zero on April 20, 2020. The seaborne Brent North Sea crude oil futures on the Intercontinental Exchange rose by over $36 per barrel on its continuous futures contract.

The landlocked NYMEX futures fell to lows as there was nowhere to store the energy commodity as the May contract expired. Anyone holding futures contracts on April 20 without access to storage and the ability to take delivery in Cushing, Oklahoma, was forced to sell at any price. The drop in Brent caused panic among oil-producing nations worldwide, including OPEC members and Russia, as energy demand evaporated during the pandemic's spread.

After months of a substantial price recovery, the crude oil market could face some headwinds as the prices are reaching the half-century mark, and we move towards 2021. Bullish and bearish factors pull the crude oil price in opposite directions as it continues to take the stairs to the upside. The United States Crude Oil Fund (USO) and the United States Brent Crude Oil Fund (BNO) follow the prices of the crude oil benchmarks that trade on the NYMEX and Intercontinental Exchange.

Crude oil rises to its highest price since early March

The elevator ride from over $40 per barrel in late October to a low of below $34 on the continuous NYMEX crude oil contract on November 2 turned out to be a false breakdown. Throughout November and December, crude oil got back on the staircase to the upside.

Source: CQG

As the weekly chart highlights, the oil price rallied over the past seven consecutive weeks, reaching a high of $49.28 per barrel last week, the highest level since the final week of February.

Resistance at the half-century mark in NYMEX crude oil futures

Nearby NYMEX crude oil futures could run into some congestion and technical resistance at the $50 per barrel level. The last time the price of the energy commodity was north of the half-century market was ten months ago. Meanwhile, Brent futures are already above $52 per barrel.

Source: Barchart

As the chart illustrates, the nearby February Brent crude oil contract closed last week at $52.26 per barrel level.

Inventory data is not bullish- Tightness in the forward curve

Inventory data from the American Petroleum Institute and Energy Information Administration has not been very bullish for the crude oil market. The ongoing COVID-19 pandemic continues to weigh on the demand for the energy commodity.

Since the week ending on October 2, the API and EIA reported inventory builds of 2.768 million and 7.70 million barrels of crude oil, respectively, as of the week ending on December 11. Gasoline stocks rose by 9.631 and 10.70 million barrels. Both reported declines in distillate stocks of between 21.5 and 21.90 million barrels over the period. The data suggest that the petroleum and oil product markets continue to suffer from demand concerns considering declines in production in the US and from OPEC+.

Meanwhile, tightness in the spread between NYMEX crude oil for delivery in February 2021 and February 2022 is a sign of rising supply concerns.

Source: CQG

The chart of NYMEX crude oil for delivery in February 2022 minus February 2021 shows the market's term structure moved from a $3.11 contango in early November to a $1.34 backwardation at the end of last week. The shift in the forward curve as the price of crude oil appreciated over the past weeks signifies nearby tightness for the energy commodity. Brent crude oil futures for the same period were also trading at a $1.19 backwardation for the same period.

Aside from the rising price, the tightness could be coming from concerns over the recent assassination of Iran's top nuclear scientist. The Middle East is home to half the world's crude oil reserves. Political turbulence in the region tends to cause supply concerns to rise.

An end to the pandemic is bullish, and so is the path of US energy policy

The demand for energy is likely to increase in the aftermath of the COVID-19 pandemic. Meanwhile, increased regulations and a shift to a greener US energy policy could cause a decline in US output under the incoming Biden administration. US output reached a record 13.1 million barrels per day in March. We are not likely to see that level given the change in administrations on January 20, 2021.

Crude oil continues to take the stairs to the upside after falling to a bottom in early November. While there are some headwinds for the oil futures market, the path of least resistance remained higher at the end of last week. Expect lots of volatility in crude oil in 2021 as the energy commodity continues to provide power to the world.

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The United States Oil Fund (USO) was trading at $32.05 per share on Monday morning, down $1.43 (-4.27%). Year-to-date, USO has declined -68.73%, versus a 14.97% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #70 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO December 21, 2020 9:50am

How High Can Crude Oil Go?

  • The OPEC+ news was bullish

  • The new administration's energy policy will be bullish

  • The trend is higher- Expect a post-pandemic rally in 2021

  • Short-term bullish, long-term ugly

2020 has been a very volatile year in the crude oil market. At the start of the year, a face-off between the US and Iran in Iraq caused the price of the energy commodity to rise in the two benchmark oil futures markets. The Middle East is home to over half the world's crude oil reserves, so the conflict prompted supply concerns. The nearby WTI price on NYMEX peaked at $65.65 in early January, and the Brent price on ICE rose to $71.99 per barrel.

Less than five months later, the demand destruction created by the global pandemic pushed the price of WTI futures below zero for the first time to a low of negative $40.32 on the expiring May contract. Nearby Brent futures fell to the lowest price of this century at $16.

Since then, production declines have balanced the energy commodity's fundamental equation and lifted prices. Optimism over a vaccine in 2021 also pushed prices higher. Crude oil recently reached its highest price since early March 2020 on WTI and Brent futures. The trend in the energy commodity remains higher at the end of last week.

The United States Oil Fund (USO) and the United States Brent Crude Oil Fund (BNO) move higher and lower with the prices of the two benchmark petroleum futures contracts.

The OPEC+ news was bullish

The latest OPEC+ meeting created more than a little anxiety in the oil futures arena. The disagreement between Saudi Arabia and Russia earlier this year led to a flood of output and pushed the price of WTI below zero and Brent to its lowest level of this century. On November 30, the Saudis and UAE did not agree on the quota levels going into 2021. Russia likely mediated the dispute as they have over the past four years. Russia is OPEC's most influential force, even though it is not a member. Russia puts the plus in OPEC+.

On December 3, the cartel announced it would taper output cuts by 500,000 barrels per day in January 2021 to a total cut of 7.2 mbpd. OPEC+ will continue to taper at a rate of 500,000 in February and March but will meet each month to assess the state of supply and demand fundamentals that could prompt adjustments. The oil market breathed a sigh of relief after the biannual meeting and change in production policy.

Source: CQG

As the daily chart of NYMEX January crude oil futures highlights, the price of the energy commodity rose to a new high of $47.74 on December 10, days after OPEC+'s announcement. The cartel's production policy was bullish for crude oil. Russia, Saudi Arabia, and other cartel members are now waiting for a substantial change in international petroleum fundamentals in the world's leading producing nation.

The new administration's energy policy will be bullish

President-elect Biden pledged to adopt a greener path towards energy in 2021 and beyond. A stricter regulatory environment, rejoining the Paris climate accords, and moving away from fossil fuels towards alternative energy sources encapsulates the incoming administration's plans.

Incoming Presidents typically receive support from legislators on their initiatives because a winning campaign platform reflects the voters' will. A majority in the House of Representatives and the Senate only makes the path of legislative success easier. President-elect Biden already has his majority in the House. The Senate's majority will come down to a pair of runoff elections in Georgia on January 5.

If Democrats win both seats, the fifty-fifty tie between Democrats and Republicans will hand the Senate to Democrats, as Vice President-elect Harris will have the deciding vote. It would also allow for more pressure from the Democrat's progressive wing to adopt a greener path towards energy. Without the need for compromise with a Republican Senate, environmental initiatives are likely to be more dramatic. In any case, US energy policy will experience a substantial shift, leading to lower fossil fuel production.

As US production declines over the coming years, OPEC+'s influence in the crude oil market will rise from the ashes. If OPEC members and Russia can produce at three-quarters of their capacity and the price doubles from current levels, they will be massive winners.

The trend is higher- Expect a post-pandemic rally in 2021

The April 20 low that took the landlocked WTI crude oil price below zero was a classic blow-off low.

Source: CQG

As the weekly chart highlights, crude oil has been making higher highs since April, with the latest peak coming on December 10. The next upside milestone is the psychological $50 level on nearby NYMEX futures. Above there, technical resistance stands at the $54.50, mid-February high, and the $65.65 2020 peak.

OPEC is likely to continue to taper in 2021, and US production should decline. As vaccines create herd immunity to COVID-19, we could see a surge in energy demand, supporting the crude oil price. I expect a post-pandemic rally. Moreover, global monetary and fiscal policies are highly inflationary. A falling dollar also supports the price of all commodities, and crude oil is no exception.

Short-term bullish, long-term ugly

The short-term prospects for crude oil remain bullish. We could see far higher prices in 2021. However, the long-term picture remains problematic as the world moves towards alternative energy sources. Climate change and environmental concerns foster the trend away from hydrocarbons.

Technology is changing the demand side of the fundamental equation for crude oil, gas, coal, and other fossil fuels. Electric vehicles will continue to replace gasoline-powered automobiles and diesel-powered trucks. However, the coming year could provide some shocks in the oil market.

The shift towards alternative power sources will be slow and steady, and traditional supplies could decline as supply could struggle to keep pace with demand. While the US and Europe could accelerate the trend towards alternative energy sources, over one-third of the world's population resides in China and India. Economic growth in the two nations will continue to increase the demand for hydrocarbons, which will fill the pockets of OPEC+ members in the short-term.

I am bullish on crude oil based on the current trend. The energy commodity is likely to continue to take the stairs higher as pricing and production power shifts from the US to the cartel and Russia. A rapid change in US production policy could create near-term shortages as the world experiences a surge in post-pandemic demand in the coming year.

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The United States Oil Fund (USO) was trading at $31.91 per share on Monday morning, down $0.03 (-0.09%). Year-to-date, USO has declined -68.86%, versus a 16.44% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #70 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO December 14, 2020 10:19am

Gold: Bulls Back in CONTROL

We've finally seen the bulls wake from their multi-month slumber in gold (GLD), with the metal reversing from down 2% last week to up over 2% to finish the week. This reversal was the first real chance of character we've seen since the election, which has been met with a dearth of bids on any strong gaps lower and suggests that we might finally be nearing the end of this arduous trend lower in the yellow metal.

The even better news is the fact that it's hard to find any bulls left in the trade, with bullish sentiment dropping to just 14% last week, the lowest reading in nearly two years. While there's no guarantee that we're out of the woods just yet, I continue to believe that the worst of the correction is over, and any drops below $1,750/oz will likely market the low for this cyclical correction. Let's take a closer look below:

Graphical user interface Description automatically generated

(Source: Daily Sentiment Index Data, Author's Chart)

Beginning with the bullish sentiment, we've seen a complete sea change from August, with bullish sentiment plunging from a high of 93% in early August to a reading of just 14% last week. This suggests that sentiment in the sector has shifted from extreme complacency to excessive pessimism, which is quite rare for an asset class that's still outperforming the S&P-500 (SPY) year-to-date.

In fact, the S&P-500 is up 13% for the year with 85% bulls currently, and gold is up 22% for the year with a reading of less than 30% bulls. While this pessimism could continue, it is clear which trade is beginning to get crowded and which one has lots of room for upside. Generally, the best time to buy gold is when sentiment dips below 15% bulls as there's lots of fuel to convert market participants to bulls, which translates to buying power when upside momentum works.

Therefore, while some die-hard gold bears continue to discuss that this is a crowded trade that's just registered a long-term top, I would argue that this couldn't be further from the truth. In fact, being bearish on gold is getting crowded, and markets rarely top shortly after the initial breakout from a new all-time high. Instead, the first major correction following the all-time high typically gets bought.

Chart Description automatically generated

(Source: Author's Chart)

If we move over to the fundamentals for gold, there are lots to like here as well, with the 3-month treasury bill rate minus the 12-month rate of change (ROC) in US Consumer Price Inflation (CPI) sitting in deeply negative territory.

For those unfamiliar, this is a very bullish reading for gold as there is little opportunity to cost out there to owning gold. Conversely, when this reading is in positive territory, investors do have an opportunity cost to owning gold as there are interest-bearing assets out there they can park money in, namely the real 3-month treasury bill yield.

The previous three occurrences when we had deeply negative readings like this were 1975 through 1981, 2002 through 2005, and 2007 through 2008. These were all-powerful periods for the gold price, and periods when the gold price significantly outperformed the investment of choice for most: the S&P-500.

Chart, line chart Description automatically generated

(Source: TC2000.com)

Finally, if we take a look at the technical picture, we have a rare occurrence of gold dipping below its medium-term channel line. While the metal can spend an eternity below this medium channel line in gold bear markets, it rarely spends much time below this level in secular bull markets.

Given that we had a new all-time high this year, the odds would suggest that this is a new secular bull market for the metal. As we can see above, the current range for the metal is $1,625/oz to $2,125/oz, suggesting that the bulls finally have the odds significantly back in their favor. Obviously, this oversold reading in this channel does not preclude a re-test of the recent lows near $1,760/oz, but I would expect any pullbacks to this area to find strong support.

So, what's the best course of action?

While I have yet to add to my gold position, I have been busy buying the best miners, with positions in Kirkland Lake Gold (KL) and Newmont Corporation (NEM) in multiple accounts. These two names are highly leveraged to the gold price and paying 2%+ dividend yields, allowing investors to be paid to wait if this correction continues and to get growth at a very reasonable price.

Currently, both names are trading at less than 13x FY2021 annual EPS estimates, and I have a conservative fair value of $73.00 on NEM and a conservative fair value of $60.00 on KL. This offers significant upside for current levels and strong leverage to the gold price if we do make new highs.

Meanwhile, in terms of gold, I continue to hold a long-term position and would look to add to my position if the metal breaks $1,750/oz. For now, I continue to favor the miners, but if we do see gold break its recent lows at $1,760/oz, I will look at it as a buying opportunity.

Disclosure: I am long GLD, NEM, KL

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Want More Great Investing Ideas? 9 "MUST OWN" Growth Stocks for 2021 Top 12 Stocks for 2021 Chart of the Day- See Christian Tharp's Stocks Ready to Breakout
The SPDR Gold Shares (GLD) was trading at $175.84 per share on Tuesday morning, up $0.95 (+0.54%). Year-to-date, GLD has gained 23.05%, versus a 16.08% rise in the benchmark S&P 500 index during the same period. GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #6 of 34 ETFs in the Precious Metals ETFs category.

About the Author: Taylor Dart

taylor-dartTaylor has over a decade of investing experience, with a special focus on the precious metals sector. In addition to working with ETFDailyNews, he is a prominent writer on Seeking Alpha. Learn more about Taylor’s background, along with links to his most recent articles. More...
NYSE:GLD December 8, 2020 10:05am

Oil Rally Continues As OPEC Extends Production Cuts

  • OPEC+ tapers and extends output cuts into 2021- The market breathes a sigh of relief

  • Crude oil continues to sit near the recent high

  • Expect a significant taper in 2021 as the dollar, liquidity, stimulus, and US energy policy are all bullish for the price of the energy commodity

OPEC officially meets twice each year in early winter and late spring. Since 2016, the Saudi-led oil cartel has been taking its marching orders from Russian oil minister Alexander Novak and President Vladimir Putin. When crude oil declined in 2016, the Russians saw an opportunity to expand their influence in the Middle East by taking an active role and cooperating with the international oil cartel. Acting as a bridge between the Saudis and Iranians, mortal enemies in the region, Russia became the most influential force in the cartel without being a member. OPEC has not made a move over the past years without Russia's blessing.

In early 2020, the global pandemic and a disagreement between the Russians and Saudis over output sent the price of NYMEX oil futures to the lowest price in history and Brent futures to this century's lows. An agreement to cut production by a historic ten million barrels per day balanced the supply and demand equation. OPEC+ tapered its output cut to 7.7 mbpd, a level that stood as they met on November 30 for their biannual gathering but could not agree on the course for the coming months.

On December 1, OPEC+, which includes Russia, delayed its meeting until Thursday, December 3, to build more consensus for a path forward. The United States Oil Fund (USO) tracks the price of NYMEX futures, and the United States Brent Oil Fund (BNO) follows the price of Brent oil futures that trade on the Intercontinental Exchange.

OPEC+ tapers and extends output cuts into 2021- The market breathes a sigh of relief

The delay in an agreement came from a disagreement by two OPEC members; Saudi Arabia and the UAE. The Saudis favored continuing the 7.7 mbpd output cut, while the UAE supported tapering the quotas as the price of crude oil has been stable and rising.

On December 3, with the help of the Russians, OPEC+ agreed to taper the output cuts by 500,000 barrels per day in January. The cartel and other producers will also taper by the same amount in February and March but will meet each month to potentially adjust the level.

The oil market breathed a sigh of relief after the OPEC news broke on December 3 as memories of the production standoff earlier in 2020 pushed the price of NYMEX futures into negative territory for the first time in history. A 7.2 mbpd production cut in January 2021 was welcome news for the NYMEX futures market at the end of last week.

Crude oil continues to sit near the recent high

The bullish trend in crude oil continued through the end of last week.

Source: CQG

As the chart shows, the oil January 2021 NYMEX crude oil futures closed at the $46.26 per barrel level on December 4, after trading to a new high of $46.68 on Friday. January futures made a substantial comeback, rising from a low of $34.04 on November 2. In under one month, the price rose by over 37%.

The total number of open long and short positions in the NYMEX futures market has been rising with the price of the energy commodity since early November, technical validation of the bullish trend. Price momentum and relative strength indicators are near overbought territory, with the price of oil futures near the highest price since early March. Daily historical price volatility at the 28.07% level indicates that the price continues to take the stairs to the upside.

Expect a significant taper in 2021 as the dollar, liquidity, stimulus, and US energy policy are all bullish for the price of the energy commodity

With vaccines on the horizon and the rising potential for worldwide herd immunity to COVID-19 in 2021, energy demand should rise. Expect OPEC+ to continue to taper its production cuts through the coming year. The most significant cuts could come in the spring as the peak season for gasoline consumption arrives.

Meanwhile, OPEC+'s tapering may not stop the ascent of the crude oil price next year. The dollar index continues to trend lower, which is a bullish factor. Central bank liquidity and government stimulus programs increase the money supply and debt levels at a record pace, creating inflationary pressures. Inflation erodes fiat currencies' purchasing power, which pushes all commodity prices higher, and crude oil is no exception.

Meanwhile, a stricter regulatory environment under the incoming Biden administration is likely to decrease fossil fuel production in the US. The March peak of 13.1 million barrels per day of US output is likely to stand even if demand increases as the virus fades into the world's rearview mirror. Moreover, the recent assassination of Iran's top nuclear scientist is a reminder that the region of the world that is home to more than half the world's crude oil reserves remains highly turbulent and could impact supplies and logistics.

The economic and political landscapes support the crude oil price in the aftermath of the latest OPEC+ meeting and the cartel's decision to marginally taper the production cuts next week.

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The United States Oil Fund (USO) was trading at $31.35 per share on Monday morning, down $0.21 (-0.67%). Year-to-date, USO has declined -69.41%, versus a 16.38% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #72 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO December 7, 2020 10:40am

Brent Premium Over WTI Been Rising with the Price of Crude Oil

NYSE:USO December 1, 2020 10:14am

Gold’s Bullish Picture Remains Intact

It's been a rough couple of months for the precious metals space, and while silver (SLV) managed to hold its August lows leading into Thanksgiving, gold (GLD) has come crashing down through the $1,860/oz level.

This sharp decrease on the back of three months of technical weakness has left the metal more than 13% off its highs, which is just below the 15% correction in March. Some investors have proclaimed the bull market is now over following the sharp decline we've seen.

However, it's important to note that pullbacks of this magnitude are entirely normal, even in a bull market, with the metal enduring a 17% correction in 2016 and a 14% correction in 2018. This correction currently resembles the prior two almost identically, with a dearth of bullish sentiment, complete carnage in the miner space, and a pullback to at or below gold's 200-day moving average.

Therefore, instead of panicking, one should be open-minded to the fact that the worst is likely over. Let's take a closer look below:

Chart Description automatically generated

(Source: Daily Sentiment Index Data, Author's Chart)

Beginning with the sentiment, we can see that bullish sentiment has come a long way from August levels, with the long-term moving average dropping from 85% bulls to 30% bulls. This means that we had 8.5 market participants for every 10 bullish in August, and we're now down to just 3 out of every 10 investors bullish. This is quite strange given that gold is actually up 19% for the year and outperforming the S&P-500 (SPY) and more than 85% of other ETFs. It's even more perplexing given that gold made a new all-time high this year.

While the metal still has further to reach its low-risk buy zone, I would expect to hit this area before year-end as long as gold stays below $1,900/oz. Therefore, the best thing for investors here is further weakness or limited upside progress for another week or two, as this should come close to generating a buy signal.

Chart, histogram Description automatically generated

(Source: TC2000.com)

If we look at the long-term picture, there's really nothing to be worried about, as the metal is sitting above its monthly moving average (teal line) and just below a new all-time high breakout. Typically, pullbacks have found strong support at the monthly moving average in past bull markets, as we saw in 2006, 2007, 2008, and before the meltdown in 2012. We are currently sitting above a rising monthly moving average, with this area coming in near $1,700/oz.

It also looks like we're carving out a handle to this decade-long cup-shaped base, a very bullish development. Obviously, there's no guarantee that this handle ends up forming and that we don't retrace further, but the first test of a monthly moving average in a new bull market is almost always a buying opportunity. Therefore, I don't see a single reason to be bearish here.

Chart, histogram Description automatically generated

(Source: TC2000.com)

If we zoom in on the shorter-term picture, we've got a very messy correction on our hands, but gold is sitting right at its lower wedge support and also re-testing the downtrend line it broke out of in mid-October.

This is a logical spot for the metal to find some support, but the bounce's strength should tell us whether the lows are finally in. If we can see a strong bounce and a thrust back above $1,860/oz on a weekly close, I would argue that there's a high probability the correction has run its course. However, as long as we remain below $1,860/oz, a drop to $1,775/oz is on the table - with this being the prior resistance in Q2.

So, what's the best course of action?

While the metal might still have another couple of weeks] to go in this correction, I believe the worst is over.

Therefore, I see this as an opportune time to start nibbling on some of the best miners with the most attractive valuations, with two of these being Kirkland Lake Gold (KL) and Newmont Corporation (NEM). These two companies are currently paying 2% annual dividend yields and trading below 12x FY2021 annual EPS estimates, a compelling valuation for companies that are expected to grow annual EPS by over 30% next year.

When it comes to gold, I have not added to my position yet, but I continue to remain long from $1,450/oz last year. If we were to see a drop below $1,760/oz, I would look to increase my exposure. For now, the jury is out on whether the low is in, but a recovery back above $1,860/oz would be a bullish development.

Disclosure: I am long KL, NEM, GLD

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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The SPDR Gold Shares (GLD) was trading at $167.01 per share on Friday morning, down $2.50 (-1.47%). Year-to-date, GLD has gained 16.87%, versus a 14.67% rise in the benchmark S&P 500 index during the same period. GLD currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #14 of 34 ETFs in the Precious Metals ETFs category.

About the Author: Taylor Dart

taylor-dartTaylor has over a decade of investing experience, with a special focus on the precious metals sector. In addition to working with ETFDailyNews, he is a prominent writer on Seeking Alpha. Learn more about Taylor’s background, along with links to his most recent articles. More...
NYSE:GLD November 27, 2020 10:30am

Seeds Being Planted for Big Move in Crude Oil

  • The bearish case- Risk-off, gridlock, and seasonality

  • The bullish case- Vaccines, stimulus, a shift in US production policy, and the Middle East

  • A false break lower- A return to the midpoint- A reckoning because of the massive level of inflationary seeds from 2020

At the $42 per barrel level at the end of last week, the nearby NYMEX crude oil futures contract was sitting above the pivot point that has been in place since early June. The December crude oil futures price peaked at $4.33 over the $40 level in late August. In early November, it fell to $6.36 below the $40 pivot point. However, the trading range from $33.64 to $44.33 has contained the price action since May 29.

Markets are often like tightly coiled springs. They can trade in a price band for extended periods, but an explosion to the upside or implosion to the downside tends to occur when they finally move.

Crude oil demand has suffered during the global pandemic. OPEC, Russia, and other world producers have cooperated to cut output by 7.7 million barrels per day. The group is likely to extend those cuts for at least three more months before the end of 2020. US crude oil output recently stood at 10.90 mbpd, almost 17% below the peak level at 13.1 mbpd from March 2020. Meanwhile, there are signs that the current trading band could lead to higher oil prices over the coming months. The United States Oil Fund (USO) tracks the price action in a portfolio of NYMEX crude oil futures contracts. The UCO and SCO ETN products are short-term tools that magnify the price action in the futures arena on. the up and downside.

The bearish case- Risk-off, gridlock, and seasonality

When crude oil fell below $0 per barrel and under negative $40 in late April, the risk-off environment caused by the global pandemic made the demand for the energy commodity evaporate. The rise in the number of cases and hospitalizations in Europe and the US threatens another risk-off period if the COVID-19 cases continue to rise over the coming weeks and months. Lockdowns and increased social distancing requirements worldwide would cause the demand for crude oil to decline.

Source: CQG

The chart shows that the price of active month January NYMEX crude oil futures fell from $42.15 on October 20 to a low of $34.04 on November 2 as virus cases rose.

Meanwhile, the majority in the US Senate is still up for grabs in the aftermath of the November 3 election. Voters in Georgia will go to the polls on January 5 to elect two senators. With the balance of power at 50 seats for Republicans and 48 for Democrats, if the Republicans win one of the seats, Kentucky Senator Mitch McConnel will remain the Senate majority leader. The Biden administration and House of Representatives will need to compromise on legislation. The bottom line is that gridlock in the US government would not allow for dramatic energy policy changes. Oil and gas production would likely continue, albeit with more regulations.

Finally, over the coming weeks, seasonality is likely to weigh on the price of crude oil. Since gasoline is the most ubiquitous oil product and drivers put fewer miles on their cars during the winter months, oil and gasoline prices tend to reach seasonal lows during the winter months.

The bullish case - Vaccines, stimulus, a shift in US production policy, and the Middle East

The bullish case for crude oil comes from science, government, and the geopolitical landscape.  After reaching the low on November 2 at $34.04, January futures put in a. bullish reversal on the daily chart on the day before the US election and added to gains on November 9.

Source: CQG

Pfizer's November 9 news that its coronavirus vaccine was 90% effective lifted the NYMEX oil futures price to a high of $43.33 on November 11. After correcting to just above the $40 pivot point on November 13, the energy commodity took off on the upside once again on Monday, November 16, when the trial on Moderna's vaccine was 95% effective. A vaccine would return life to some sense of normalcy, which is bullish for the crude oil price. January futures settled at $42.42 per barrel on Friday, November 20.

Meanwhile, long after the virus fades into memories, we will still be paying for the unprecedented level of central bank liquidity and low-interest rates. Government stimulus has already caused the US Treasury to borrow a record $3 trillion in May 2020, and more borrowing is on the horizon. Liquidity and stimulus increase the money supply and national debt, and it weighs on the purchasing power of currencies. The policies are highly inflationary, an economic condition that the US central bank is encouraging by raising their 2% target rate to an average of 2%. While the difference may seem subtle, it is not. Rising inflation and a falling dollar are bullish for all commodity prices, and crude oil is no exception.

If Democrats find a way to win both Senate contests in Georgia, it would hand the majority leader gavel to New York Senator Chuck Schumer and give the incoming President's party a clear path for legislation. A majority in the Senate would pave the way for a far more progressive agenda that includes limiting or banning fracking, causing US natural gas output to decline substantially. Lower production would likely lead to higher prices.

Finally, the Middle East remains home to more than half the world's petroleum reserves and is still the most turbulent political area on the earth. Any problems in the region that impact production, refining, or logistical routes would push prices higher. A dramatic shift in US production policy could hand control of crude oil prices back to OPEC and Russia.

A false break lower- A return to the midpoint- A reckoning because of the massive level of inflationary seeds from 2020

January crude oil fell below technical support at the October 2 low of $37.30 and the June 12 bottom of $35.94, when it reached $34.04 on November 2. The price stopped 42 cents shy of the May 22 $33.62 low.

The bullish reversal on November 2 pushed the price back into a bullish mode and above the $40 pivot point. January futures came within $1.26 of the August 26 high and was trading at $42.42 per barrel at the end of last week. A close above $41.70 on the nearby NYMEX futures contract on November 30 would put in a bullish reversal on the monthly chart, which could ignite a technical rally that takes the energy commodity to a new high, and the highest price since early March.

Meanwhile, the central banks and governments have spent the greater part of 2020 fighting the economic fallout from COVID-19 with liquidity and stimulus, which are inflationary seeds. 2020 is looking a lot like 2008 when it comes to three factors. However, this year, the stakes are higher.

Central bank liquidity is at a greater level than one dozen years ago, and today's government stimulus dwarfs the amount in 2008. Moreover, in 2008, the US elected Barrack Obama as the forty-fourth President of the United States. In 2020, his Vice President, Joe Biden, became the forty-sixth, President-elect. In 2008, crude oil found a bottom at $32.48, but in 2011 the price reached $114.83. After falling to negative $40.32 in March 2020, the upside could be explosive over the coming years, given the similarity between policies in 2008 and 2020. However, in 2008 there were no plans to reduce US output, making the coming years even more interesting.

Want More Great Investing Ideas? 9 "MUST OWN" Growth Stocks for 2021 Why Investors DON'T Care About Covid-19 Anymore 5 WINNING Stocks Chart Patterns
The United States Oil Fund (USO) was trading at $29.60 per share on Monday morning, up $0.33 (+1.13%). Year-to-date, USO has declined -71.12%, versus a 12.46% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #73 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO November 23, 2020 11:27am

Are we Back to The Pivot Point or is it Time to Try the Upside?

NYSE:USO November 16, 2020 2:04pm

Gold’s Long-Term Picture Remains BULLISH

It's been a frustrating couple of months for the price of gold (GLD) as the S&P-500 (SPY) has received most of the attention, hitting new highs following the election while gold took another leg down. However, while the recent weakness continues to grind down the bulls' confidence, it's worth noting that we've still seen no real technical damage done to the big picture.

In fact, gold still remains above its previous record quarterly close, yet bullish sentiment continues to waver. This weakness is creating an opportunity for investors to begin to start positions in the best miners in the sector, especially considering that yields in the sector are 30% higher than when this correction began. Let's take a closer look below:

Chart, line chart Description automatically generated

(Source: TC2000.com)

If we look at the above daily chart of gold, we can see that the waterfall decline last week was certainly not pretty, but it didn't put any real dent in the technical picture. This is because the metal continues to trade above its short-term downtrend, and we've already seen a slight change of character from August and September.

This is because the metal was previously running into its downtrend line and making lower lows, but since mid-October, the metal has been holding the line at $1,860/oz and finding support on any re-tests of its broken downtrend line. This is a bullish development as long as it holds, so the key for the bulls from now on will be defending $1,830/oz at all costs.

A picture containing clock Description automatically generated

(Source: TC2000.com)

If we move over to the big picture for gold, we can see that this whole correction has not even registered as a blip on the long-term chart. As shown above, gold put in a new all-time quarterly high close near $1,900/oz in Q3 and remains above its long-term breakout level of $1,800/oz. The previous record quarterly close for the metal and long-term pivot also comes in at $1,780/oz, and we're above this level as well.

Therefore, while the recent correction might be concerning to those zoomed in on 2-hour and 4-hour charts, the quarterly chart shows that this whole correction has occurred in new record-high territory for the metal, and there's no reason to consider this breakout in jeopardy at all. This does not mean that the metal can't fail and that this breakout is guaranteed to hold, but as long as the metal stays above $1,775/oz, I would view the big picture as bullish.

Chart, histogram Description automatically generated

(Source: Daily Sentiment Index Data, Author's Chart)

While the proof that the technical picture remains intact is great, the most encouraging sign is the fact that market participants are becoming extremely pessimistic for no reason. As the chart above shows, the long-term moving average for sentiment has slid from 85% bulls to 40% bulls despite a run-of-the-mill 12% correction in the metal. Meanwhile, daily sentiment readings have slipped to below 20%, suggesting four bears for every one bull in the market. It is quite rare for us to see this much pessimism despite a very normal correction and following a breakout to new all-time highs. Therefore, I would argue that sentiment is finally becoming a tailwind for the metal, and any further dips towards $1,840/oz are likely to get bought up. So, what's the best course of action? While I have not added to my gold position yet that I continue to hold from $1,450~/oz, I would consider adding if the metal dips below $1,820/oz. For now, I continue to focus on miners that are increasing dividends and have 50% plus gross margins like Kirkland Lake Gold (KL) and B2Gold (BTG). These two names have been sold off despite posting record quarters in Q3, and both names are currently playing 2.0%+ dividend yields. Given that the miners have much better leverage to the metal, I see this as the lowest-risk way to play the sector, especially since both names are more than 20% below their all-time highs. Therefore, for investors looking for exposure to the sector, I believe Kirkland Lake (KL), and B2Gold are two areas to put on their shopping list if we see any weakness. Disclosure: I am long KL, BTG, GLD Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing. Want More Great Investing Ideas? 9 "MUST OWN" Growth Stocks for 2021 Is the Bull Market Back on Track? 5 WINNING Stocks Chart Patterns
The SPDR Gold Shares (GLD) was trading at $176.31 per share on Thursday morning, up $1.41 (+0.81%). Year-to-date, GLD has gained 23.38%, versus a 11.89% rise in the benchmark S&P 500 index during the same period. GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #2 of 34 ETFs in the Precious Metals ETFs category.

About the Author: Taylor Dart

taylor-dartTaylor has over a decade of investing experience, with a special focus on the precious metals sector. In addition to working with ETFDailyNews, he is a prominent writer on Seeking Alpha. Learn more about Taylor’s background, along with links to his most recent articles. More...
NYSE:GLD November 12, 2020 12:07pm

Crude Oil Jumps 9% Higher Following Positive Vaccine News

  • The future for the world's leading producer of crude oil

  • Fracking and regulation over the coming years

  • Price dynamics for crude oil in the post-COVOD-19 world

In March 2020, US crude oil output rose to a record 13.1 million barrels per day. At that level, the production was above Russian and Saudi Arabian daily output. The global pandemic crushed the demand side of the fundamental equation. US output fell, and OPEC, Russia, and other world producers announced an unprecedented output decline of almost ten million barrels per day.

For decades, US energy policy has strived for independence from reliance on Middle Eastern supplies. Over the past years, fewer regulations and support for US oil and gas production helped it become the world's leader. The November 3 election was a referendum on the US's future position in energy output. Democrats favored a move away from fossil fuels, while Republicans advocated for policies that would maintain the leadership role in oil production.

The voters spoke last week in the most contentious contest in years. The United States Crude Oil Fund (USO) and the United States Brent Oil Fund (BNO) follow the prices of the two benchmarks higher and lower. On Monday, November 2, one day before the election, the price of December NYMEX crude oil futures put in a bullish reversal trading pattern on the daily chart, which was a clue about which way the election would turn out. One week later, after the election, the price of crude oil exploded higher.

The future for the world's leading producer of crude oil

The election results took a long time because the contest was close. Aside from razor-thin margins in swing states, the Electoral College contest was not settled by the end of last week. Joe Biden was only one state away from going over the top and President Trump in a position where he needed to run the table in Georgia, North Carolina, Pennsylvania, and Nevada to capture enough states for re-election. On Saturday, November 7, Joe Biden won the Presidency, but legal battles seem likely to continue. While Democrats will be in the White House in January, the Republican Senate majority depends on a pair of runoff elections in Georgia in January. Republicans picked up seats in the House of Representatives, but not enough to change the Democrat's majority. The bottom line for the energy markets is that while there was no blue wave and sweep, the Georgia contests could determine the future of US energy policy.

Fracking and regulation over the coming years

A bipartisan agreement is necessary to create substantial changes in US energy policies if the Senate remains in the hands of Republicans. If Democrats take control, we significant change could occur. While a stricter regulatory environment is on the horizon, a ban or significant limits on fracking may be in the hands of Georgia voters.

President Biden will likely feel more pressure from his party's progressive wing when it comes to the Green New Deal if Democrats win the Senate. As a former Senator, the new President knows that compromise is the only route to achieving legislation if the Republicans maintain a majority.

Meanwhile, Joe Biden won his party's nomination as a moderate. Progressives will continue to attempt to push his administration to the left, but he will have to make a choice which could be a function of Georgia contests. Successful legislative initiatives will rely on Senate approval. When it comes to fracking and regulation, the Senate's majority will determine regulatory changes over the next two years. As the Democrats lost seats in the House of Representatives, the 2022 midterm elections will become a significant issue during the coming years. Politically astute Democrats may not want to jeopardize their majority in the House by enacting legislation that causes substantial job losses in the energy sector. At the same time, a far stricter US regulatory environment threatens to hand the influence in the energy markets back to OPEC and the Russians. Voters could lay the blame for rising energy prices at the feet of Democrats if they are too aggressive when it comes to green legislation.

Price dynamics for crude oil in the post-COVOD-19 world

A blue wave that prompts the return of a strict regulatory environment could have caused significant changes in US oil and gas output. The political landscape now favors more rules and regulations.

The global pandemic continues to be the leading issue for oil and gas prices in the near term. On November 9, Pfizer (PFE) announced its vaccine is 90% effective. In the coronavirus's aftermath, when the demand returns, the political risk of an aggressive green approach may not be worth the risk for the new President or moderate Democrats in the House and Senate. In the aftermath of the election, the price of natural gas fell from almost $3.40 to below the $2.90 per MMBtu level as of November 9.

Source: CQG

As the chart highlights, nearby December NYMEX crude oil futures rose from a low of $33.64 on November 2 to over $40 per barrel on November 9. The $40 level has been a pivot point for the energy commodity since June as bullish and bearish factors were pulling it in opposite directions. Lower worldwide production balanced lower demand because of the pandemic. The news of a vaccine caused the price of the energy commodity to explode higher.

Meanwhile, central bank liquidity and government stimulus are increasing the money supply, which is ultimately inflationary. Higher inflation is bullish for the price of oil and all commodities. The bearish trend in the US dollar, the benchmark pricing mechanism for crude oil, is also a bullish factor.

The bottom line is that the election results will not change the fundamentals for crude oil all that much. Inflationary pressures and a weak US currency are bullish factors that could remain long after the demand destruction because of coronavirus ends.

A majority for Democrats in the Senate could still cause dramatic shifts in US energy output. The thin margins in the election with the country divided could impact policy decisions. $40 remains the pivot point for nearby NYMEX futures. While the energy commodity has made lower highs and lower lows since August, seasonal factors during the winter months tend to lead to price weakness.

In the aftermath of the US election, and news of a vaccine on the horizon, the political dynamics for crude oil shift from the US supply-side back to the international landscape. The Middle East is home to over half the world's reserves, which always threatens to cause volatility in the blink of an eye. Time will tell if a greener US energy policy hands the power base back to OPEC and Russia when it comes to prices.

Want More Great Investing Ideas? Stocks Face SOARING Risk in November? 7 Best ETFs for the NEXT Bull Market 5 WINNING Stocks Chart Patterns
USO shares were trading at $28.34 per share on Monday afternoon, up $1.87 (+7.06%). Year-to-date, USO has declined -72.35%, versus a 13.69% rise in the benchmark S&P 500 index during the same period.
The United States Oil Fund (USO) was trading at $28.37 per share on Monday afternoon, up $1.90 (+7.18%). Year-to-date, USO has declined -72.32%, versus a 14.04% rise in the benchmark S&P 500 index during the same period. USO currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #65 of 113 ETFs in the Commodity ETFs category.

About the Author: Andrew Hecht

andrew-hechtAndy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
NYSE:USO November 9, 2020 1:22pm

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