close icon

Crude Oil Ignores OPEC-Russia Deal to Breach $50

WTI crude oil dipped below $50 a barrel in late-November, but quickly recovered to $54.54 on December 4th. The price spent the next ten days above the $50 mark and it looked like the bulls might be able to bounce up from this key psychological level. Unfortunately for them, the price of crude oil fell to $49.05 on Monday and to $47.87 so far today.

The continued oil price weakness follows a recent deal between Russia and OPEC to cut oil production by as much as 1.2 million barrels a day. However, it turns out that any optimism about oil prices inspired by this deal was premature.

And that is the very reason why we prefer to rely on price charts than external news and events. The chart below was sent to our subscribers on December 12th – five days after the presumably bullish OPEC – Russia deal. The WTI crude oil price was still hovering above $52.60 at the time, but the Elliott Wave Principle indicated the bears were not ready to give up yet.
WTI crude oil selloff predicted by Elliott Wave analysis
The price has been locked in a $5 range for a couple of weeks. According to the Wave theory, the most likely explanation for its behavior was that a triangle correction was in progress. Triangles are continuation patterns, which consist of five waves, labeled a-b-c-d-e. In the contracting variety, each wave is smaller than the previous one.

With that in mind we concluded that crude oil was still in a downtrend and as long as the price was below the top of wave “c” at $54.20, more weakness can be expected. Six days later, the updated chart below shows how ignoring a major oil production cut deal can actually be a good decision for traders.
Elliott wave traders ahead of crude oil prices
The last time WTI crude oil traded this low was over a year ago – in September 2017. Please, note that the triangle correction did not develop exactly as we expected. It turned out wave “d” was still in progress and wave “e” took the price up to $53.24 before the bears returned. This demonstrates just how tricky triangles are. One can rarely be sure if a triangle is really over.

On the bright side, triangles usually provide a clear invalidation level. Here, that was the top of wave “c” at $54.20. As visible, the bulls never really threatened this key level. The negative Elliott Wave outlook was kept alive the whole time and sticking to it paid off nicely less than a week later.

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:

Crude Oil Made an Elliott Wave “Push-Up” Last Week

It has been an eventful week for crude oil traders. On Wednesday, January 16th, the EIA revealed that inventories have decreased by 2.7 million barrels from the previous week. In the same time, it became clear that U.S. oil production rose to a record high of 11.9 million barrels per day. The first piece of…

Read More »

Catching Crude Oil ‘s $7-Rally Amid Supply Glut Fears

Crude oil bulls got slaughtered in the last three months of 2018. Between the start of October and the end of December, the price fell by over 45% from $77.07 to $42.21, sparking fears of a new supply glut. Then, the selloff’s sudden stop caught nearly everyone by surprise. Yesterday, WTI crude oil reached $52.48.…

Read More »

Crude Oil: How Elliott Wave Deals with Uncertainty

On October 3rd, the price of WTI crude oil was up 27.9% year-to-date, corresponding to a rally from $60.09 to $76.88 a barrel in a little over nine months. Unfortunately for the bulls, no trend lasts forever and the rest of October confirmed that fact. Crude oil prices plunged to $64.83 yesterday, erasing almost 72%…

Read More »

WTI Crude Oil and the Case Against Top/Bottom Picking

Traders often think they have to catch each and every move in its entirety, in order to be successful. The sad truth is that is impossible and trying to achieve it can easily backfire and lead to more losses instead of bigger profits. Whether you trade Forex, WTI crude oil or stocks, nobody can catch…

Read More »

Crude Oil Bears Betrayed By a Trend Line

It was a good week for the crude oil market, which has been under pressure for over a month. WTI climbed to as high as $75.24 on July 3rd, but the bulls could not keep the positive momentum, which led to a decline to as low as $64.40 by August 15th. And just when it…

Read More »

WTI Crude Oil ‘s Flirt with $66 Was No Coincidence

WTI crude oil set an upbeat mood at the start of last week and managed to lift the price to $69.89 on Monday, August 6th. They could not keep the positive momentum for very long though, as the price quickly reversed to the south again. By Friday, August 10th, the bears had already dragged WTI…

Read More »

Crude Oil Even Weaker than Expected

WTI crude oil bulls looked very confident at the start of the week, when they lifted the price to $70.41 a barrel on Monday, July 30th. Unfortunately, their enthusiasm quickly faded, allowing the bears to cause a selloff to $67.34 as of Wednesday, August 1st. One of the possible “reasons” for the decline was the…

Read More »

More analyses