close icon

Where Did That WTI Crude Rally Come From?

It recently became clear that OPEC members have not been following their own output cut agreement very strictly, which could be an explanation of WTI crude oil’s sharp decline to $47.03 by March 22nd. But despite the continuing supply glut, the price of oil today is higher than $50.30 a barrel, following a sharp recovery from as low as $47.23.

The fact that the market is not always logical is nothing new and common sense often leads to the wrong conclusion. That the oil price is going to decline in a supply glut environment, for example. Luckily, the Elliott Wave Principle was there to prepare us for the exact opposite. The WTI crude oil price chart given below, was sent to our clients before the market opened on Monday, March 27th.(some marks have been removed for this article)
elliott-wave-chart-wti-crude-oil march 27
As visible, this week’s sharp rally did not came as a surprise. Instead of joining the bears near $48.10 on Monday, we thought it was time for the bulls to show up and lift the price to “around $50 a barrel. The reason why we took a contrarian approach was the wave structure of the decline between $49.59 and $47.03, labeled as wave b). It was a three-wave a-b-c. In other words – a corrective sequence. Our assumption was that WTI crude was in the middle of an expanding flat correction, where wave c) up was remaining. That is all.
elliott-wave-chart wti crude oil updated
The Wave Principle once again told us what the news could not. That selling was not recommended, because a significant oil price surge was very likely.

In conclusion:

  • It is not all about OPEC
  • Relying on the news is bad for you
  • Price reversals can be predicted with the Elliott Wave principle

Stay informed with our newsletter

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

Privacy policy
You may also like:

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 »

Crude Oil Bears Needed a Spark. Trump Threw a Bomb

The price of crude oil recorded its biggest daily decline in four years Thursday after President Trump threatened to impose new tariffs on $300 billion worth of Chinese goods. The U.S.-China trade war has been unfolding during most of Trump’s presidency. With the 2020 elections approaching, many thought a trade deal might be in the…

Read More »

Crude Oil Bears Needed a Week… And Mike Pompeo

The price of crude oil has been marching upward since early June, when it bottomed at $50.59. By July 11th, a barrel cost $60.91. Unfortunately for the bulls, the rally came to a halt after Secretary of State Mike Pompeo stated Iran was willing to negotiate on its ballistic missile program. To the oil market,…

Read More »

Elliott Wave Setup Helps Crude Add 8.4% in a Week

The price of crude oil is approaching the $61 mark helped by U.S.-Iran tensions and a 9.5-million barrel decrease in US inventories. A rally in oil prices might seem easy to explain now, but it wasn’t so obvious a week ago. On July 3rd, crude was barely holding above $56 a barrel after a decline…

Read More »

Crude Oil Shows Why Alternative Counts Matter

Trade war fears are officially back, causing indiscriminate selling of stocks and commodities alike. Crude oil has been hit especially hard as supply glut worries are also beginning to reemerge. Crude oil closed at $53.34 a barrel last week, but this selloff was triggered by the breach of a key level in the week before…

Read More »

More analyses