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:

Ahead of the 14% Crude Oil Dive with Elliott Wave

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…

Read More »

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 »

More analyses