The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, is sporting a fourth-quarter gain of about 13%, but the benchmark oil exchange traded product is still fighting a familiar technical battle.

Saudi Arabia is the largest producer and kingpin in the Organization of Petroleum Exporting Countries (OPEC). For its part, OPEC remains concerned about the level of production by U.S. shale producers and the cartel is urging its U.S. rivals to pare output to support prices. According to the Energy Information Administration, crude oil product could hit 9.9 million barrels per day in 2018, which surpasses the prior high reached in 1970 of 9.6 million barrels per day.

“USO’s struggles in the $12 region are not a new phenomenon this year. Resistance here dates back to a bear gap in December 2015, and has since emerged as an impressively impenetrable ceiling. In 2016, the fund’s highest weekly closing price checked in at $11.98, and the current 52-week high stands squarely at $12.00,” according to Schaeffer’s Investment Research.

While the Organization of Petroleum Exporting Countries have moved to cut production, expectations of continued U.S. shale production remain a deterring factor. Nevertheless, recent U.S. inventory drawdowns, which if sustained, could support the current price levels.

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“And if we look even farther back on USO’s chart, we’ll arrive at the July 2008 all-time weekly closing high of $117.39 (attained just prior to the rapid-fire implosion of the commodity bubble later that summer, and a few short months before the most chaotic days of the financial crisis). Given the significance of round-number returns from key historical price points as levels of support and/or resistance, we would be remiss not to observe that USO’s current year-to-date breakeven level roughly coincides with a 90% decline from its record weekly closing high — namely, $11.74,” notes Schaeffer’s.

On Thursday, oil prices fell to a two-week low after on reports that U.S. inventories rose and that gasoline demand may be faltering. Additionally, data indicate short interest in USO, the most heavily traded oil ETF, has recently increased.

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