Tag Archives: Crude Oil

Crude Oil Still Double Topping

This double top is so close to call that I switched back to a potential zigzag bullish phase that can work in a diagonal 5th wave. Gasoline is far from reaching any potential double top,  so we have a good divergence between the two types of commodities. There is not much we can add to the short term picture except that oil can head south right along with the stock market. The commercial traders don’t instill any great urgency to pile into this extended bullish push, as they have been net short for some time already. $65.50 is the price to beat with this very busy June contract. Once mid June rolls around, I will then switch to the December contract which is just as busy as this June contract is.

The December contract is also much lower in price by about $4. It would be far more bullish, if the December contract is higher in price!

The Gold/Oil ratio has not made any real dramatic moves as it has been averaging around the 20.5:1 ratio. This ratio must keep compressing otherwise it has a high probability of starting to spread. A spreading Gold/Oil ratio would then show us that oil is getting cheaper when we use the Troy gold ounce as a measuring tool.

Crude Oil: Break Out, Or Bear Attack?

Once I had a look at the intraday chart I had to bump it up to 3500 bars from my normal 500.  This allows us to go back further, but still keep Intraday settings.  At the $65.36 price level crude oil could be hitting a brick wall, at least in the shorter term. We have a double top and a big obvious Head. In true bull markets, these types of H&S setups can be very bullish,  But if we are ending a bullish phase, then this H&S pattern can be an ominous warning.

It sure looks like a bullish zigzag but I do have choices depending what oil will do next, if it crashes with another zigzag, then a triangle will work, but if any decline looks more like a 5 wave sequence, then an expanded flat could be completed.

We could roll around the $56 price level for a little while, before oil turns and soars again. I think if another zigzag develops heading down, then we should get a big “b” wave counter rally.  I will give crude oil until the $55 price range, but after that the wave counts could get trashed rather quickly.

Crude Oil 2009-2018 Weekly Chart Review

What the majority that called that crude oil was in a bull market didn’t pan out that well. The crash into the 2016 bottom made sure of that. Even now, many call this a bull market, but they are also waiting for a correction. With crude oil we have monthly contracts, but I always look ahead to see where the next busiest month is.

Without a shadow of doubt,  the June 2018 and December 2018 contracts are the two busiest months. This means when the June contract expires I will be going directly into the December 2018 contract month. There was a 25 cent difference between the April and June contracts which is nothing in the bigger scope of things which produced  little change in the Gold/Oil ratio. I will talk more about the Gold/Oil ratio at the bottom of this page.

The fact that I’m showing a Primary degree “B” wave top must make the July, 2008 peak a Cycle degree peak. At the early 2009 bottom, we have a bear market about 7-8  year’s long, plus another two years in our present rally. It would be something if crude oil ended up with a bear market lasting 13 years!  I don’t think we can get that lucky because the big question is if our present rally is a fake.

This could still take a few more years and we need something more solid to go on. During the 3 year, topping process oil created a classic wedge which gave us a clue that a down draft in the price of oil was coming. Flip this wedge in reverse and you would get an explosive rally, like what happened with the VIX.

 Analyzing Chart Patterns: The Wedge

The H&S pattern didn’t disappear or is no longer important, even with a higher right shoulder. The January 2018 peak finished at $65.52, but there is no guarantee it will hold in the short term.

Crude oil crashed along with stocks in 2008, but also recovered with the stock market in early 2009. What has happened once can happen again, so I sure don’t want to rule anything out.

Any 4th wave bullish phase should technically get completely retraced, which would be lower than $28 on a weekly crude oil chart.

America has become a giant oil exporting nation so they can pump as much as other countries are willing to buy. The supply may not be an issue, but demand could dry up and blow away. This is speculation based on a possible 4th wave scenario in Intermediate degree.

Why U.S. Oil Exports Are Surging | OilPrice.com

Crude Oil Intraday Update

I carried on from my last wave count and so far I can still make a bearish scenario work.  As I post, crude oil was going up so any alternate move could slice through the top trend line  The Gold/Oil ratio has hardly moved and is averaging around 21.5:1. Commercial traders are also net short so they don’t see a real bright bullish future for WTI crude oil. The USA is going to join the world club in being in the top three oil exporters, right along with Russia and Saudi Arabia.

I’m bearish on oil, but I’m looking for the pattern that shows the best 3 wave corrective crash before I turn super bullish on oil gain. Once this oil chart starts to do too much of sideways dance, then another better fitting wave count should be found.

This is always harder than it sounds, but constantly looks at the bigger picture as well. The top trend line shows that we have lower highs  still developing. At this intraday scale, this type of a trend line can get trashed very quickly.

Crude Oil Intraday Crash Review

Since the mid February bottom, crude oil charged up producing a wild pattern that just will not work as a simple impulse wave structure. Rallies this choppy usually retraces the entire move, but we need oil to dip much further to help confirm my suspicions. As I post, a small rally is taking place, so anything can still happen. Inventory levels are being drained, and many large oil fields will be losing their production capabilities in the next few years. Crude oil inventory levels mean little if the stock market is going to enter into a recession.

In the 2008 crash even gold and oil plunged with the markets, so any event that has happened in the past can happen again. Commercial traders are net short crude oil but not with any real screaming bearish numbers. A quick calculation puts the net short ratio at about 1.35:1 which is not an extreme position.

If this bullish run is over then the $58 price level would be the next main price target to get hit. I’m looking for the big move to look like a correction has completed, but at this point I still can’t jump on the crude oil bullish bandwagon.

The Gold/Oil ratio hit 21.17:1 today, which has been pretty normal in the last month or so. Any fast move which compresses the Gold/Oil ratio very quickly can mean, a much bigger decline is just around the corner.

Crude Oil Intraday Rally Review

Crude oil soared after what looks like a double bottom. There is a strong probability that crude oil is completing a 4th wave rally due to its choppy rally.  There is a chance that crude oil can still break higher, but then we would also be getting very close to the bottom of my wave one in Minute degree.  We may have to wait out all of February for this move to clear up, but otherwise it could turn into a wave 2 in Minor degree.

I have nothing better at this time, but oil could still see downward pressure along with the general stock markets. Oil certainly rallied also with stocks, but stocks may still have upside left in the next few days.  The Gold/Oil ratio is hovering around 21.63:1 but this should expand if crude oil resumes its southerly direction.

I’m not going to turn bullish except for short term bullish runs. Until I see that a clear cut correction of sufficient physical size has completed, I can’t turn bullish for the longer term.

Crude Oil Explosive Rally Update!


I was expecting a 4th wave rally and the markets did not disappoint us. There was a strong small counter rally that may put a crimp into this wave count, but eventually the crude oil should resume it’s southerly path to what could be a new wave 1 but in Minor degree.

So far the Gold/Oil ratio of 22:1 has been improving, but it will be a slow process. I constantly look at the daily and weekly oil charts, but switching  from a daily chart to a weekly chart will dramatically change the wave counts. Until all the oil bears have come out of their caves and sliced every oil bull in the process will we be in a position when oil can start another huge leg up. Maybe crude oil can turn back into a glut when the US government sells off its reserves.

Fundamentals are lagging indicators so if the experts see that an oil glut has arrived, chances are good the glut is over and a new bullish phase will start.  The markets will always do the opposite of what fundamental reasoning suggests, as the biggest gluts produced the biggest oil bull markets.

Until I see a great looking corrective oil crash playing out, I can’t turn bullish for the longer term.

Crude Oil Crash Update

This is the April 2018 contract month, but it’s a bit too far ahead in time. It’s not a big deal as we still have to figure out what the potential wave count is.   We do have a double top kind of a pattern which I’m working as a diagonal set of 5 waves down. On Friday we ended with a sharp spike to the downside which can produce another rally push crude oil right back up to the $60 price level.

Even now this crude oil slump has not gone deep enough for the bearish phase to be called finished, so this impending rally could be another fake as well.  I’m looking for a possible zigzag correction in Minor degree which I can’t call completed at this time.

The Gold/Oil ratio has improved somewhat, but not by any great leaps and bounds. At 22.34:1 it is now back to where the ratio was in early December of 2017.  The ratio may not be any help to us at this time, unless it shifts dramatically in a very short period of time.

In the short term I may have to shift my degree levels a bit, but I might do that after this rally completely fails to materialize.

Crude Oil Intraday Update

Like gold, crude oil also had an impressive rally, but the oil price has now started to back off. Any normal correction could fall back down to the previous 4th wave of one lesser degree. This would be close to the $58-$56 price range. Of course, if a bigger degree decline is going to happen, then that $56 price level will not hold.  Either way the oil price could decline along with the stock markets. At times the oil price correlates with stocks as oil crashed just before stocks hit a major bottom.

This happening again is a very high probability situation and can’t be ignored. Even though it may not happen, a previous major low in oil could be down between the $48-$44 price levels.

Last weeks Oil COT report had the commercials net short by a wide margin, with the speculators doing the exact opposite thing. It’s the speculators that always chase a trend, as they are adding to their net long positions as the oil market is pointing up. Speculators added 20,444 long positions last week,  just before oil started to suffer a correction. The mass media reports using the speculators numbers, as they think fund managers is the smart money.

I was hoping for more of a compressed Gold/Oil ratio than this present 21:1 ratio. Even before the 2014-2015 oil crash started, crude oil had a 17:1 ratio, which ultimately ended with a 44:1 ratio. On any oil decline, we will eventually see the Gold/Oil ratio start to spread again. This ratio may hit 25 or 30:1, so we have to be aware of this when it happens.

Crude Oil Intraday Record High Running Out Of Gas?

Crude Oil seems to be running out of gas and has started another move that could fall much lower or deeper than what the majority think will happen. When I think it is important, I will post multiple wave counts.Since I dropped the degree level down by one degree, but used the bottom of Minscule degree.  I will no longer post any wave count that is smaller than the official list of 15 degrees. By using only 15 degree levels, it helps to better gauge the end of a run across most intraday charts.

Simply put, “once we run out of degree levels, the bigger trend is also coming to an end. The size of the 4th waves get smaller and smaller, as we get near the end of a run. I have gone back to using the fixed degree list for some time already, which most readers will never notice the change.

Yes, I may still be a bit early, but we have to be a bit early so more readers can adjust their thinking.  If we go back to the daily chart, we can see a major bottom on June, 22, 2017 of $44. This would be a very bearish downside price target, which is hard to imagine, but I would consider a decline like that as pretty normal.

We are dealing with wildly leveraged commodities contracts, that have a very bad reputation for making crazy moves that are very hard to catch before they happen.

It will remain to be seen if we have more upside left, but I sure like the idea of a triangle in a 4th wave which was followed by a “thrust” to the upside. The triangle forces a degree change as well, and most of the time it can be a difference of two or more degree levels.

At $60,  oil has run into resistance and struggled as it touched $64 so far. There is also a huge H&S pattern with the daily charts, and we know these patterns can also produce violent reactions.

The Oil volatility index OVX also had a bottom at $22.98 and has now started to climb again in recent days. Technically speaking the OVX will rise much more if this bearish oil correction starts to take shape.

Crude Oil Daily Chart Bull Market Update

If there is any doubt from the public perspective, if oil is in a bull market or not, then this rally to $63 should help to dispell that. Of course the herd took about 2 years before they figured it out. The $60 price level produced some resistance, but now seems to have barely worked past it.  Oil should still correct, but it can do this very suddenly, and freak out all the oil bulls again. This last surge to the upside is the result of the previous correction, but diagonal wave structures can create havoc in forecasting any future price targets.

We need another price target as the $60 price has been achieved. Oil also wobbled around the $55 price level and the next even Fibonacci number would be $89  oil. Just in case that is not enough, we can use $115 and then $147. That would force a degree change in my present wave counts, but that is to be expected with such an ugly oil bull market start.

The Gold/Oil ratio is compressing a bit all the time, but nothing to get really excited about at this time. The Gold/Oil ratio crossed below the 21:1 ratio, but that is still a far cry from the 9:1 ratio we had at the top of 2008. If the ratio changes dramatically, in a short period of time, then a bigger bull market correction could happen.

The previous 4th wave dip is between $58 and $56 USD, which could turn all the bulls bearish again, when that illusive $60 price level doesn’t hold.

I know I give price projections, but the price is just for public consumption as the whole world works on price. The pattern is far more important than any price forecast as when we can identify any 3 wave decline, we know that the market will retrace the entire move from where this specific  “A” wave in question, started from.  Everything is relevant to the largest degree, we think we are working in.

Crude Oil Intraday $60 Resistance Update.

At this time I’m still able to keep my wave degrees alive, but I know it will need adjusting again in the future. Gasoline displayed any “E” wave as a new low, but crude oil did not. We certainly got the “thrust” that usually follows any triangle. It will also force another degree change, if I like it or not.  For now, another correction seems to be in progress, which may not be finished just yet. We could get a sharp downward move yet, but spikes to the downside are bullish moves in a bull market.

With all the wild moves in gold and oil you would figure that the Gold/Oil ratio would dramatically change but in reality, it changed very little. The ratio today is 21.71:1 which has been floating between 21-22:1. Some analysts have made wild crude oil price forecasts already, but all the crazy future price forecasts you will read about, mean nothing if the Gold/Oil ratio suddenly shifts to below 10:1. This could happen at $89 or the $115 price level.

All the oil bears have been repeatedly demolished as the bull horns do their job. When the markets go up after repeated bearish calls, then this is a clear indicator that oil is still in a bull market.  When that situation starts to reverse, then any oil bullish phase will start to come to an end.

The big oil crash from the mid 2008 peak to the early 2016 bottom, sure can fit as a zigzag, which means that eventually crude oil will retrace its entire 7 1/2 year bear market.

Crude oil stopped just a bit under that $60 price level, which has been a resistance price target for some time. Eventually crude oil will break free again, and soar towards that $89 price target.

Crude Oil Intraday Update: Up, Down, And Sideways

It may not sound right to many people, but technically, charts can only move in one of three main directions. North, South, and East. When a trend has soared North, we have 2 directions remaining where oil can go next. When it goes sideways, it’s in the process of switching directions. Which trend line will oil hit first? The top one, or the bottom one?

The wave count I’m showing is short term bullish, if a diagonal bullish phase is in progress.  I try not to present many alternates on one chart, as I have to use many of the past wave positions as a reference, for a new wave count. I checked the Gold/Oil ratio and it has compressed  to just a bit below 22:1. This may be due to the fact that we are in the February 2018 contract month, which usually smooths out over time.  Now if this ratio suddenly moved to say, 20:1 or 17:1, then we may be due for a longer correction.

The bearish move can still happen, so the bottom trend line would get sliced in two, once oil charges below $55.  The $60 oil price  is a previous bear market resistance level, so it stands to reason that oil is giving the oil bulls a hard time. I mentioned it many times that bull markets end when their charts are pointing up, but this is not one of those times. The vertical move would be obvious on a weekly or monthly chart as well. Far more bullish media would have to be present, which are still missing today.

Some analysts are calling for a very bearish $40 oil market in 2018, but I don’t see it that way at all. Any bearish target is worthless information if oil does crash to $40 but then drives to $89-$115 or more.

The idea is to never waste a bull market in asset classes, but being late chasing a bull market is not what I mean. I like it better when the markets make a firm commitment in one direction, as after that we usually get a soaring reversal.

Any zigzag or flat that is pointing down in a bullish phase ending with a C5 wave, will get completely retraced over time. Since the crash from the 2008 peak looks like an “ABC” pattern, then eventually crude oil should rise above $147 highs.

Crude Oil Intraday Gyrations With Oilcoin Commentary!

This is the January 2018 crude oil contract. It’s starting to look like a triangle at this time, or a zigzag to a new wave 1-2 can also work. The triangle could head back down to the $55.20 price level so in the short term we could see some more bearish action.  Elliott Wave triangles do not show up in any wave 1-2 positions, they can  show up in “B” waves and any 4th wave. 

I’m sure the oil bulls will freak out when a deep correction happens, as bearish news could dominate,  as the oil price takes another hit.  It is harder to gauge the bearish mood during intraday corrections, but we have to keep in mind that a much bigger crude oil bullish phase, is still going to come.

Any big bullish phase that’s still to come could take all of 2018 and then some,  for this oil bull market to play out.  If we bring the same mentality to the oil market like there is in Bitcoin,  then any emotional commodities investor will get burned. Commodities are extremely cyclical and these cycles happen much more frequently than they happen in stocks.  From my perspective, I will remain bullish until this entire oil bull market has completed. 

If oil goes to $89 or to the old record $147 (double top), is irrelevant at this stage of the game. All the bearish news they can throw at us will mean nothing, as bull markets do not end when the charts are pointing down. They end when all the experts are in agreement, and are painting us  a wonderful picture with the oil price going much higher.  This may be hard for the majority to understand, but for the seasoned contrarians it’s all old school stuff.   A seasoned contrarian is someone that has been through 3 or 4 bear/bull cycles and has benefited from each one. 

For Bitcoin Zombies, staring at their mobile device, they will be happy to know that a potential “Oilcoin” is being developed! Yes, another ICO  joins the pack of 500 other coin offerings.

The Gold/Oil ratio is sitting at about 22:1, which changed little in the last month or so.  This ratio would have to compress much more before oil gets into an over-bought condition. 

Crude Oil Intraday Gyrations Review

In the future I may have to knock the degree level down by one, but for now I will leave it as is. What looked like a simple correction could turn into a correction much deeper than originally expected. Since the June 2017 low, crude oil charged up on what can only be described as a diagonal frenzy. The entire rise until the $59 price level, ended up being about $15. A 50-60% net retracement could get  us to about the $50 price level. There is a nice previous bull market dip down there as well, which can offer some great support.

The Gold/Oil ratio is hovering around the 22:1 range, which is still far away from being expensive at this stage of the oil bull market.

As the oil market declines this ratio should spread.  This $60 resistance price level has a big part to play in any impending correction, but if we get a very bearish bottom, then the next leg up would certainly break past $60. 

Many analysts are calling for $40 oil, but we may never see that even with this impending decline.  The worst scenario would be a long drawn out sideways pattern or a triangle. 

The entire chart history of oil starting back in 1850 seems to be a diagonal wave structure, certainly not a picture perfect impulse pattern.  I work big charts from printouts and all I can see at this time, is that oil only has 5 waves in Cycle degree.  After the 5 diagonal waves in Cycle degree are found, then I have no clue what could happen next.  I love working on large, long term charts, but I will never do them in the computer.  We learn nothing by painting a bunch of numbers and letters in our computers, mainly it’s because many are just too lazy to go back and find their mistakes. 


Crude Oil Intraday Correction Update

Since my last update on oil, it was heading for another high, followed by another correction.  At this time it looks like the correction needs more time to play out.  A little bit of panic selling and crude oil could create a nice spike to the downside, which happens many times just before oil reverses again.   Gasoline futures are also declining, and it looks like it is in a correction with as well. 

Back down at the June 2017 low, I’m using a 4th wave in Minor degree as a position. This is only a temporary position, and it would require that this wave count to end on an “A” wave in Intermediate degree. This $60 price level seems to be providing a strong resistance price level.  I’m sure the oil price will still have some problems bumping its head on this invisible $60 ceiling, but it will eventually push higher.

When we check the Gold/Oil ratio this morning we are at an even number of 22:1. This is a bit more expensive when we use gold as money, but not anywhere near crazy enough, like they are in the 5 stock market indices I track.  

Oil could spend most of 2018 rolling around acting like the bull market has come to an end, but many times it also takes a “C” wave to go vertical before a bull market dies. 

Until the time when the crude oil ratio starts to compress much more, or it compresses  with high speed, then another bearish trend can start, or it will be the end of this oil bull market. 

I always go back and look at the oil charts that started in 1850, and oil has shown diagonals wave structures for the entire time. It’s not entirely a puzzle why the markets are so choppy.

Refineries have to switch to winter fuels as summer driving demand has curtailed. Hurricane season has also ended in December so refineries had the time to get back their production to normal winter levels. I don’t trust any fundamental reasoning why markets go up and down, as they can change as fast as the wind.

We still get analysts that say oil is going back down to $40 while others say oil is going to $80! At least the $80 price is closer to my $89 forecast. For those who are supply and demand freaks, remember that this oil bull market started from a massive world oil  glut. I bet no expert can point to any single fundamental news story, that triggered the oil bull market.

Crude Oil Intraday Correction And the Gold/Oil Ratio!

This morning crude oil stop at $59 before it started a small correction. Small corrections can turn into bigger corrections, and with such a choppy base we can get wild corrections that can go deeper than expected. Even then it does not mean that this oil bull market is finished.

The crude oil prices have seemed to converge closer together across the futures contracts, which is a good thing as it helps with the Gold/Oil ratio.   The $60-$62 price range is also stiff resistance, but if gold still has a few more legs to go then this $60 barrier will get sliced in two. 

$55 would be a nice previous turning point that might supply support, but then the bottom trend line may also help with support. 

I mentioned that the Gold/Oil ratio was also compressing and $59 represented a 22:1 ratio.  This ratio may give us a correction, but it sure is not close to any extreme, or the end of the oil bull market.  Markets come to an end when they are pointing up, not when they are pointing down, which is the opposite of what the public sees. 

Jumping on the bandwagon when markets are going vertical displays the FOMO syndrome perfectly. (Fear Of Missing Out) At the Gold/Oil ratio of 22.35:1 this morning it shows that the ratio has started to expand a bit again.  At this time 17:1 is still a target for the future, but other indicators must also come in. One of my favorite indicators is that the consensus forecasts for oil will start to use $200 crude oil again.   They have been trying for $200 for over 8 years, but crude oil fooled all the expert forecasters and proceeded to crash to $34.

 Not only did this happen once but again in late 2015  when crude oil crashed to $28 producing yet another world oil glut. With their infinite, consensus forecasting abilities, the experts were calling for $10 oil. Oil couldn’t care less about any forecast and proceeded to turn up to our present high. 

Crude Oil Intraday Record Highs Review


Crude oil has been cranking up as many fundamentals continually conspired against any bearish calls. 

 WTI Prices Surge On Keystone Spill | OilPrice.com

This news is another example how unexpected events can change fundamental supply and demand numbers. With this surge crude oil has cleared the previous major high of $57.60 back in early 2017.  I’m using an intermediate degree as my base, followed by one crazy pattern that defies any great looking impulse. I’m sure I will have to adjust this wave count at a later date, but at this time we are approaching the peak of the top trend line for the third time. 

A correction should be coming even though bull markets end when the charts are pointing up, but not when they are pointing down. The Gold/Oil ratio has been compressing in the last few days at 22:1 but we need crude oil to compress much more before it becomes expensive again.  A rapid ratio compression move can be an early warning for a correction. This correction may be a bit bigger than what most bulls might expect at this time.  A very fast dip or “mini crash” usually means an “ABC” correction has just happened, which will follow with yet another leg up. 

The bottom trend line may give us a clue where any substantial oil correction can stop at, but a diagonal move sure can make any two trend lines obsolete very quickly. I’m not a fan of trend lines at the best of times as they are extremely subjective, and they have been abused to the point they are useless. 

Crude oil could just drop back down to the $55 price level and then start back up, so there is not just one number oil can turn on.  As I post, crude oil is still struggling to go higher, but oil could reverse just before closing time. 

Crude Oil Intraday Rally Update

Crude oil did not decline any further, but actually stop right at the Fibonacci $55 price level and has now proceeded north again. Back in late August 2017, crude oil stopped at the $47 price level, which is also a Fibonacci ratio, (34×1.382). There is so much turmoil in the world crude oil market, which can screw up any fundamental reason for oil to rise.  One minute they call for a return of the crude oil bear market, and next they call for $60 oil.  I would rather see oil above $89 some time in the future, but the Gold/Oil ratio would have to help confirm it. 

Today the Gold/Oil ratio dropped below 23:1 which only happened a few times in early 2017.   Oil is getting a bit more expensive when compared to gold, but still well below any long term overbought condition. If the speed of the ratio compression picks up, then we may be getting closer to a much bigger correction. The last thing I want to do is call an end to this bull market, before it’s ready to do so. Oil may still have to make a much bigger vertical move, before any end is near, 

Crude Oil Vertical Move Update

This is the January crude oil daily chart contract which has a different price than a weekly chart has. On the weekly charts crude oil has pushed above the early 2017 high. It would be nice to see a bit more, to help confirm that the last 9-10 months,  was just a correction. 

The next target price level to beat will be the $61 price level. We could find stiff resistance at $61 and pattern wise could also become a 4th wave rally top, if  oil was just in a small bear market rally. A bullish phase is either finished or not finished, but large degree bear market rallies will fool us as they can rally for years before they implode.   Any “D” wave rally in Primary degree will certainly fool everyone as they can have the same bullish mood as any wave 1 would give us. 

Gold also has charged up which would distort the Gold/Oil ratio a bit. Using the January contract the Gold/Oil ratio did compress a bit to 22.21:1 which was a very small change. I’d like to see far more compression for a longer period of time before we get too excited that this bull market is coming to an end! 

WTI Soars As U.S. Oil Rigs See Biggest Decline Of The Year | OilPrice.com

The fundamental news can change like the wind, as the world is in turmoil regarding supply and demand numbers.  Markets are not driven by logic or fundamentals,  as our emotions are the primary forces at play.  At this time the 2008 top was a Cycle degree top with the potential of being in a triangle. This can still take all of 2018 to finish, and oil may even go vertical again before it dies. Many claim the oil will die when electric cars become mainstream, and they could be right, but fossil fuels are still used for electricity production all around the world. Our future depends on low cost electricity with India and China are having the lowest cost electrical energy production in the world.  They can afford the juice to crank out Bitcoins and became the center for Bitcoin production. It takes the equivalent of 20 barrels of crude oil, of electricity production, just to create one Bitcoin!   

“To put this in perspective, the total energy consumption of the world’s Bitcoin mining activities is more than 40 times greater than that required to power the entire Visa network.”

November, 1, 2017 Crude Oil Weekly Chart Double Top Review

This weekly chart has $55 as a double top, so some we could get some stiff resistance at this time. Eventually crude oil should create an upside breakout as I think there is much more to go before this oil bull market is ready to die. Yes, we can experience and unexpected dramatic drop in the oil price, but I think there are far too many fast moving fundamentals still at play in this choppy world of oil. 

Any triangle I may be working we could be in a “D” wave bull market, which can still take us to the $89 price level. Gasoline did not crash to new lows like crude oil did, so that keeps and “D” wave alive as well. 

Once I calculate the Gold/Oil ratio from this weekly chart, the ratio is a bit more expensive at 23.5:1. This is still not enough to kill this bull market, as I would like to see these numbers compress much more. Taking a reading once or twice a week should be enough to see a potential extreme creeping up on us.  In the long run electric cars my kill the petrol driven cars, but that has to be a natural market driven process. If electric cars are a natural  good thing, then there is no need for governments to kill all fossil fuel driven cars. 

I don’t think the electrical grids can handle all these electric cars on the road, as all it would take is overload the grid and the majority of electric cars will be sitting going nowhere.  Any wild solar storms or solar hurricanes can do major damage to the electrical grid and all major satellites and ISS out in orbit, also get dragged down by solar storms.

Every chart I create, be it intraday, daily, or weekly will produce different patterns and prices, so the wave counts do get scrambled many times.

Crude Oil Intraday Highs Updtae

Crude Oil is struggling higher and is now creating another small spike to the upside. The October rally has been very choppy, and I don’t expect that to change anytime soon.  No real clean 5 wave impulse waves seem to last for very long, so any bullish phase can be part of a bigger bullish phase still to play out. When the markets are this wild, then sudden crashes can happen when we least expect them to. 

Crashes usually produce a new set of 3 wave declining patterns, which are just corrections in a bigger bull market still to play out.  Oil still has to cross that $58 price level, with this December contract. That would just confirm that what we did have since the 2017 peak, was a correction.  Switching between chart time periods does distort the charts, which distorts any wave count we can produce. 

Many times when the oil price does drop, many can get into a panic thinking it’s all over. It takes more than just a price drop to kill a bullish phase, as more bulls need to be on board pushing oil to a very expensive Gold/Oil ratio. This has not happened in any sense of the word, but could happen once crude oil breaks out and heads much higher. At 23.27:1, the Gold/Oil ratio is just not enough at this point, to help forecast another crude oil price crash. 9:1 and 17:1 where the two ratios that oil crashed from.

What it will take this time, is uncertain, but an average between the two extremes is about 13.5:1.  It still could take a full year for this to play out, and fund flows will show up when it does. Steven Jon Kaplan is very good at tracking fund flows, but the media will also report fund flows.  We will only know about it, if we are listening or paying attention to these contrarian indicators. 

Crude Oil Intraday Gyrations Review

Crude oil created one more leg up before it started to implode again. The wave 3 on your top left side is in Subminuette degree. I had to use all degree levels down to the Miniscule degree level. Eventually I may have to increase my degree level by at least one degree, but for now I can keep what I have. What can throw this wave count into the electronic trash can is that another leg up starts to develop.  Any short term drop to $50.40 cannot be ruled out as well, but a complete retracement of the October rally would help to confirm that what we had was just a bearish rally. 

Chasing the fundamentals in oil is irrelevant as they change about as fast as the directions of Hurricanes do. Hurricane Ophelia is way out in the mid Atlantic and still heading east by northeast, and far away from any drilling rigs in the gulf.

Many analysts have made the $100 price level as a target for 2018, and at this time I am the last person to argue with those forecasts.  Mind you it took them well over 21 months to come up with that forecast. 

The Gold/Oil ratio is still at 25.30:1 which is not a concern at this time. With this December contract the price levels still to beat is about $53, with $58+ being the real goal to confirm that what we did have was just a big correction.  

In the long run I would love to see the $89 price level get hit, but it will depend on the Gold/Oil ratio, as $115 would be the last price peak that can get hit. 

Crude Oil Intraday Correction Still In Progress

Crude oil has been on a chopper ride up,  and now it seems to be heading the opposite way. I believe it is in a correction, but how deep it can still go is a best guess situation, as we have multiple alternate wave counts in progress as well. My bottom trend line is just for show as oil can dip well below that trend line, and still dip into what I show as a diagonal wave 1-2. 

Even though crude oil looked like it created a single zigzag, it would take another new low and we would have a 5 wave sequence. The worst scenario would be, that oil makes a much bigger and longer correction than anticipated. Longer corrections start to bring doubt back into the picture, as many get the idea that the oil bull market is over. There is too much turmoil in the oil markets to justify an end to the oil bull market. 

Eventually oil still has to clear the $58 price level with this December contract. When crude oil does clear this hurdle, then the bearish phase will be confirmed as just being another correction. Analysts are calling for much higher oil prices, but they never can tell you what will happen after their price targets get hit.  In the long run $89 crude oil is still achievable with $115 as being the “Pot Of Gold Under The Rainbow”.

This would be for a potential “D” wave bull market that may take until the end of 2018 to complete.  The Gold/Oil ratio is just perfect at 25:1 and it should compress,  as this bull market becomes very obvious to the majority. If the ratio compresses dramatically, then we may have a different scenario that we have to look at. Below 20:1 may be a good warning, but that doesn’t mean the ratio can’t go to 17:1. In 2014 the Gold/Oil ratio did hit 17:1 and then started to implode again.  

Crude Oil Intraday Correction Update

I think crude oil is looking for a correction. The trend lines are there only to show the top line has touched several peaks. Any correction could slice through the bottom trend line with ease if a bigger correction is about to play out. Either way its not the end of the crude oil bull market just yet, even though any impending correction can surprise us. Diagonal waves can produce some unexpected moves to say the least, as they can traveling much deeper than what a bottom trend line would suggest.

Another zigzag could develop, but a wild looking flat connecting a bigger zigzag can also happen.

It is always useful to know the Gold/Oil ratio extremes we’ve had since the 2008 oil peak. The ratio will remind us when things get cheaper or more expensive when compared to gold. At 24.82:1 we are not at any extreme. In late 1999 the gold oil ratio was also around 25:1 and look what happened to oil after that bottom.  Crude oil may never achieve another run like that, but it can crash just as fast, as the oil crash of 2014 reminded us.

Oil still has to battle above the $51 price level, and that is only to help confirm that crude oil was in a corrective bearish phase for all of 2017.  I try not to use trend lines that much, as they are so abused to the point that trend lines have little meaning. 

Crude Oil Intraday Peak Review

Crude oil has been cranking up in price, but the pattern gives us nothing but choppy waves. There still could be one more shot to the upside, but eventually we should get at least a correction, to throw off the bull wagon riders. There are a few near vertical moves that defy logic, but we also know that markets don’t work on logic. Markets run on emotions, and anything related to commodities usually runs on “fear”. Fear and extreme leverage produce all these wild spikes. 

I thought I would add a picture of what I can see any time during any hurricane season, which all should become less frequent until the end of hurricane season in November.  Even though massive amounts of warnings were given the majority were surprised when the hurricanes shredded the Caribbean islands. 

The Gold/Oil ratio, compressed a bit more making oil a bit more expensive gold. The last time we had a 24.83:1 ratio was way back in April 2017. Still, this is not near any extreme just yet. I record ratios several times a week, and we would have a concern if this ratio suddenly shifts and compresses much more. 

Crude Oil Intraday Bullish Phase Update

Crude oil has shown that It wants to keep going up, but what a hell of a choppy ride it has been so far. Since I’m working another potential diagonal my waves can overlap very deep if it wants to. With a potential war breathing down our necks, I can understand the bullish sentiment towards oil. I started the top wave count as a “B” wave, but when I was editing the chart, I saw what looks like a potential triangle.   I could see a triangle in a potential 4th wave, but it is a very small degree level and should not do to much damage once the “thrust” is played out. 

Even then the 5th wave would be another zigzag. If oil travels much deeper, and takes longer in time to play out, then I will have to look for an alternate wave count. This is nothing new as with crude oil I’m constantly looking for alternate wave counts. 

Crude oil is having difficulty at the $51 price level, but for oil to show us what it’s got, the $55 price level must be exceeded. Crude oil soaring past $55 helps to confirm that the 8 month bear market in oil had been just a correction, in a bigger bull market yet to come. Longer term $89 is still a good price target, for now! 

I measured the Gold/Oil ratio this morning, which was 26.04:1.  This is still very decent and nothing to worry about. I think we may see 20:1 when this bull market gets over bought, but in desperation oil could also see 17:1 or smaller. This ratio has to compress as it becomes more expensive compared to gold.

I don’t consider crude oil as Black Gold because eventually oil goes out the pipe of a car  as a greenhouse gas and disappears. Much like paper money does today.  😉 

Crude Oil Rocket Ride Review

The correct I thought would happen was trashed as crude oil soared to another higher high. Crude oil also created a vertical spike which is usually followed by a correction in a bull market. When the big bullish phase comes to an end, then we could also see a vertical move, but then it sure will not be a correction.

That time is not now even if we have a dramatic decline in oil prices. Oil may wobble around for some time but should then start to crank up again. 

With this spike the Gold/Oil ratio became more expensive, but not by much. At 26:1 crude oil has lots of room to move up, but if we see a sudden shift towards the 20:1 ratio then we have to start taking notice. Until that day comes, this oil bull market is still alive. If we measure once or twice a week we should start catching any extreme long before the majority get suspicious. 

If we don’t calculate the Gold/Oil on a regular basis, then we will surely not see another oil crash coming. Besides the Gold/Oil ratio,  Steven Jon Kaplan will also see the top coming. He will post it or send that information to his subscribers, like he did in 2008. I have his RRS feed on the sidebar, but we have to see if it works the next time he posts.  

I do not use any internal indicators as those are the indicators for the majority, besides all those indicators in the trading tool box, are from an ancient era of the 1970’s when electronic trading started. 

Crude Oil Intraday Correction Review

Since early August crude oil has been on what looks like a correction. Where we are in this correction is another matter. The correction could have finished in late August, but that remains to be seen. Even now oil remains choppy with no real direction in mind.   Worst case scenario is that oil is in a triangle, but them we surely cannot be in a wave 2 positions. $58 is the big price top to beat, which would confirm that the entire bearish phase since mid 2016 was just a correction. 

Only one hurricane shows up at the Hurricane center web site, with Jose being far away from landfall and only rated as a category 1 at this time.  Another hurricane may form, but that can  still be 48 hours or more before we can see anything.  Hurricane Harvey wrecked havoc where 20% of oil refining is shut down. In the long run it will all work out, but these hurricanes are just part of the turmoil that is facing oil production and refining around the world.

September the 10th is the midway point of hurricane season lasting until November 30th. It seems that the types of storms also change in the second half of hurricane season.

The Gold/Oil ratio is just a bit below 27:1 which is still relatively cheap when comparing it to gold. This ratio has been drifting between 25 and 28:1 and until this ratio shifts dramatically towards 17:1 or lower, then the oil bull market is still alive. Oil could go to $89, and  if this ratio turns into a 17:1 reading or lower,  then we know to look for the end of the oil bull market. 

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.