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 market, as usual, decided to act first and ask questions later. WTI crude oil touched $60.63 a barrel in the first trading minutes on Monday and is still hovering above $59.50 as of this writing.
What interests us is not the price surge itself. The shocking attacks on Saudi Aramco facilities pretty much tell the story. The interesting part is the setup that was already in place when the market closed on Friday, before the attacks. Take a look at it below.
WTI crude oil closed at $54.87 a barrel on Friday. The chart above was sent to our subscribers several hours before Monday’s open. It reveals that there was a textbook Elliott Wave cycle pointing north. In this respect, Saturday’s drone attacks were the catalyst this setup has been waiting for.
Wave “a” was a five-wave impulse, labeled i-ii-iii-iv-v. It was followed by an a)-b)-c) running flat correction in wave b). According to the theory, another rally in wave “c” was supposed to materialize. Then the drones struck.
Given that the market opened with a huge gap to the upside on Monday, it is fair to say that traders didn’t have a real chance to take advantage of this setup. However, the fact that heading into the weekend the market was already anticipating some kind of a bullish catalyst is mind-blowing. And it keeps happening, again and again.
What will WTI Crude Oil bring next week? That is the subject of discussion in our next premium analysis due out late Sunday!