close icon

Ahead of the 14% Crude Oil Dive with Elliott Wave

What will WTI Crude Oil bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!

The crude oil market is capable of going from a state of oversupply to one of not enough supply in relatively short time. OPEC and Russia’s decisions and the fact that in a normal year the world consumes over 100 million barrels of oil daily cause the pendulum to swing from glut to deficit quite quickly.

At the start of this month OPEC announced it is going to keep production steady through April. The vaccines rollout and ongoing economic recovery, in the meantime, come with gradually increasing oil consumption. And while it is probably too early to talk about a supply deficit, it is also true that WTI prices went from -$38 to almost $68 a barrel in less than a year.

Why then did the price of crude oil suddenly drop 14% over the past two weeks? From a fundamental macro perspective, the exact reason remains hard to pinpoint. From an Elliott Wave point of view, though, that plunge was not only logical but also predictable.

Crude Oil poised for a bearish Elliott Wave reversal

The chart above was sent to our subscribers before the market opened on Monday, March 8th. It focused on the fact that the structure of the rally from $33.78 was impulsive. The pattern was labeled 1-2-3-4-5, where the sub-waves of 1 and 3 were also visible.

Crude Oil Bears Return with a Bang

According to the Elliott Wave theory, a three-wave correction follows every impulse. So, instead of blindly extrapolating the recent strength into the future, we thought it was time for a notable bearish reversal. Corrections usually erase the entire fifth wave of the preceding impulse. Here, this meant a dip at least to the support area of wave 4 could be expected. The chart below shows WTI’s development over the following two weeks.

Crude oil drops 14% in two weeks in Elliott Wave correction

Crude oil opened with the so-called exhaustion gap and reached as high as $67.80 the same day. From then on, however, the bears took complete control of the situation. Ten days, later, on March 18th, the price was already down 14% to $58.27. As expected, the entire progress made by wave 5 has been erased.

We have no idea how the pandemic is going to unfold nor what OPEC+ is planning. What we do know is that in the search for future guidance it pays to look for Elliott Wave patterns.

What will WTI Crude Oil bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Chevron Stock Doubled in a Year, Can Go Higher Still

A year ago it seemed like all hell was breaking loose on the oil industry. Even oil majors like Chevron couldn’t escape the carnage. First it was the pandemic, which forced governments to close businesses and restrict travel. Then, the Russia-Saudi Arabia oil price war worsened the situation as the two countries failed to negotiate…

Read More »

Crude Oil Reaches Bullish Target Amid New Lockdowns

COVID-19 returned with a new force in Europe after the warm summer months. Countries around the continent have entered new lockdowns in an attempt to curb the virus’ spread. The situation in the U.S. has never been worse with roughly 200 000 cases per day. But unlike during the first wave of measures, crude oil…

Read More »

Crude Oil – The Elliott Wave Reason for the Reversal

At the start of last week crude oil was trading at less than $36 a barrel. It was down from $43.84 in August and from $41.91 on October 20th. Fortunately, Elliott Wave analysis helped us prepare for this selloff in advance. So, when the weekly session began, the price of crude oil was down 14%…

Read More »

Crude Oil Bears Make the Most of Their Time to Shine

After the market broke during the pandemic panic and crude oil prices fell into negative territory, a quick and sharp surge followed. WTI climbed to $43.84 a barrel in late-August. But the crisis was far from over and the Elliott Wave principle helped us correctly predict the bearish reversal that came next. Now, crude oil…

Read More »

Crude Oil Gave Bulls a Clear Warning Before it Dropped

It’s been a bad couple of weeks for crude oil bulls. The price had been steadily climbing for months, up over 300% since late-April. In the last days of August, WTI crude oil reached almost $44 a barrel. By September 8th, however, the price was below $36.50. This 17% drop can be explained with the…

Read More »

Bullish Crude Oil Bet Pays Off Against All Odds

When it comes to the crude oil market, last month was one for the history books. The coronavirus pandemic forced the global economy to grind to a halt. This led to a sharp decline in oil consumption, while production was too slow to adapt. As a result, there was plenty of oil nobody wanted as…

Read More »

A Pattern + Drone Attacks Equals an Oil Price Spike

The price of WTI crude oil spiked at the open on Monday, following drone attacks on Saudi Arabian oil facilities over the weekend that practically cut the kingdom’s output in half. How long will it take for output to be restored and is the situation going to escalate from here remains to be seen. The…

Read More »

More analyses