Brent Crude Rally Update

 

 

This is a daily chart from the  February 2019 contract month as all 2018 contracts are starting to end. Brent like WTI has held its bottom price, but don’t get all excited about some major bullish move that will provide trading bliss with no worries. Good luck with that, as trends do not just reverse because of some single event or conference event.

Last month Brent crude hit a low of 57.78 and started a reversal producing another spike in the process. There should be more upside to come as small degree 5 wave sequences have started to develop. Any zigzag can produce nice impulse waves, and it is just a matter of time when this Brent crude run starts to run on empty.

Commercial hedgers have had net long positions for some time, but they have massive short positions in WTI. Two conflicting indicators by any stretch, so a call for this bullish move to eventually end will not be popular.

Since May 2018 I have been tracking the Gold/Brent ratio which can tell us a different story. Today it sits at 19.99:1, which is a bit cheaper than what it was at 16:1, but still on the very expensive side when compared to the gold cash price.  Yes, there are small differences between WTI and Brent which can change the ratio a bit.

I don’t look for some wild Fibonacci retracements as nobody really knows what wave count we are really on. Looking for a previous counter rally peak is quicker and far easier to look for another potential turning. This could be at the $68 price level. Everybody gets a Santa gift this December as investors jump back on the bullish bandwagon. Emotional panic moves in or out of an asset class never last that long as most of it can be due to panic short covering. All fundamental reasons for oil’s bullish move can’t be trusted as there is a lot of cheating going on with fake news as well. You’ve heard about fake news and one source of fake news is just propaganda practiced by every dictatorship around the world. Even democracies get in on the propaganda wars.

 

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