close icon

Crude Oil on the Path of the Hurricanes

As if Harvey was not enough, the United States now braces for Irma, which in turn is expected to be followed by Jose and Katia. Irma is considered to be the strongest hurricane ever to hit the shores of the U.S.. Its winds are blowing at speeds higher than 185 mp/h (300 km/h), enough to erase large buildings from the face of the earth, not to mention offshore oil rigs and shipments. According to the media, the hurricane season is the main reason, fueling crude oil’s sharp rally from the low at $45.57 on August 31st to as high as $49.41 yesterday.

It might be so, but the point is that it is hard to take any advantage from this explanation after the fact. From a trader’s perspective, information is only useful if it helps you prepare for what is next. In our opinion, the best tool for the job is the Elliott Wave Principle, which we applied to the following chart of WTI crude oil, sent to subscribers before the open on Monday, September 4th.(some marks have been removed for this article)
crude oil elliott wave analysis september 4th
The Wave principle is actually a pattern-recognition technique. It states that trends move in repetitive patterns, called waves. If one knows how the pattern looks and what follows it, he/she should be able to benefit from the upcoming price move. In crude oil’s case, the pattern in question was a three-wave a-b-c zig-zag correction from $50.20 to $45.57, whose wave “b” was a triangle. According to the theory, once a correction ends, the trend resumes. Here, we came to the conclusion that the recovery from the low at $42.03 was still in progress. Therefore, more strength was expected, as long as the invalidation level at $45.57 was safe. Less than a week later, here is an updated 3-hour chart of crude oil.

crude oil elliott wave analysis september 7th

The market opened at $47.29 on Monday and the price shot up almost immediately. Three days later, it was already hovering north of $49 a barrel. We did not have to predict the exact path of Irma, nor we had to count the number of oil rigs destroyed or shipments delayed by it. An eye for Elliott Wave patterns was all it took to prepare us for the crude oil price surge.



Stay informed with our newsletter

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

Privacy policy
You may also like:

Crude Oil and USDJPY Ruled by One Pattern

Everything was going so well for USDJPY and crude oil bulls until last week, when both the exchange rate and the WTI crude price made sharp bearish reversals. Oil fell from as high as $72.88 to $67.40 a barrel, while USDJPY plunged from 111.40 to 108.95. Normally, the media tried to explain the selloffs with…

Read More »

WTI Crude Oil Knocking on a Major High’s Door

Between January 25th and February 9th, WTI crude oil’s price plunged from $66.62 to $58.06 a barrel, losing 12.8% in just 12 trading days. What the bears did in just over two weeks, the bulls needed a month and a half to recover from. Finally, oil prices climbed to $66.52 earlier today, following last week’s…

Read More »

USDCAD and Crude Oil Abandon Negative Correlation

Between 2000 and 2016, USDCAD and crude oil had a negative correlation in 93% of the time. Canada is one of the world’s biggest oil producers and the largest oil supplier to the United States. So, when U.S. demand for oil rises, demand for Canadian dollars rises, as well, thus hurting the USDCAD exchange rate.…

Read More »

Crude Oil Finally Reaches the $60 Mark

As WTI crude oil approaches the $60 mark, we could conclude that it was not a smooth ride at all. The price has been wandering between $55 and $59 for nearly two months until it finally broke out of this range to reach levels not seen since late-June, 2015. A month ago the price surpassed…

Read More »

Ahead of WTI Crude Oil’s Two-Year High

The price of WTI crude oil surpassed the $58 a barrel mark this week. The last time it traded at that level was in June, 2015, when the oil crash was still in full swing. Almost two and a half years later, the bulls’ efforts are finally being rewarded. It has not been a smooth…

Read More »

Crude Oil Ignores Hurricane Nate and Slips

Here we go again. The last time hurricanes had something to do with crude oil, the price of the commodity, according to popular media, was rising because producers were bracing for Irma, whose record-breaking winds were going to severely disrupt production. That at least made sense at the time. Now, oil producers are preparing for…

Read More »

Crude Oil Finally Rewards Stubborn Bulls

If you were bullish on the price of crude oil, last week was nothing short of wonderful for you. The commodity opened the weekly trading session at $47.57 and after a small dip to the round number of $47, it climbed to as high as $50.47 a barrel, exceeding the previous major high of $50.40,…

Read More »

More analyses