Crude Oil Intraday Crash Update

At this time crude oil did travel a few dollars higher than expected, but has now started to correct. Back in August we had a single zigzag,  but this was the opening move to a flat, an expanded flat at that. If this is all close, then we should see a much deeper decline coming in the next few weeks. After all holiday driving season is coming to an end and oil could be flowing again with plenty of inventory from reserves.

Even if crude oil declines to a new low, it can convert from an “E” wave decline to a regular zigzag wave 2 type of a decline. We will not really know until the “B” wave bottom is completely retraced. Even the initial move down was pretty steep, which gives us a clue that a correction is going to take place.

Even with all the wild moves in gold and oil, the Gold/Oil ratio got a bit cheaper and touched 27.47:1. This is far from being expensive when we use gold as money,  and eventually oil will start to crank up again. If the ratio changed suddenly to say 20:1, or lower,  then we may see some real bearish action again. For now we are still far away from that scenario.

Gasoline and crude oil can go their separate ways for long periods of time, as gas has to go through the refining process first. About 20% of the refineries were shut down due to hurricane Harvey,  so that still leaves lots of refineries that can get back to full operations pretty quick once conditions allow.

So was the early September rally all “Harvey”driven?  Before too long we will never know exactly which wave it was, because people simply forget. Back in early 2002 a major hurricane hit land when oil was at a wave 1 in Primary degree. I remember the wave count, but I would have to look up the hurricane which hit the oil rigs at that time.