Last week, crude oil created a double top with the secondary peak being a bit lower. I show a starting 1-2, 1-2 count and a third 1-2 wave count might become visible due to the fact they are very small waves. I show a “C” wave bullish move which I counted as a diagonal “C” wave. The Gold/Oil ratio has not changed that much, but this ratio at about 21:1 is running into a brick wall as it has been stuck around this ratio for some time.
There is a very good chance that crude oil will dip along with stocks, and when that becomes more obvious, then the Gold/Oil ratio should expand or get cheaper.
Commercials are net short WTI crude oil, but they are also net short the Europe Oil ICE futures. The speculators are in the exact opposite positions as they are the trend chasers and always get themselves in a trap. In this case speculators are caught in a bull trap. Until some of these numbers change I can’t see any extreme bullish oil scenario at this time.
The commercial traders deal much closer to the oil industry than any speculators do, so they carry a lot less risk than the speculators. Commercial traders are not going to store high price oil, because they make no money, but when the oil price crashes it is very profitable to store oil. They will pull out all the stops to make this happen when the price of oil crashes again. In one world oil glut, (2008) they had 25 tankers floating around the Mideast gulf region at that time. Low and behold all those tankers eventually disappeared. The same thing happened at the 2016 low, as they were stacking up oil carriers to deliver oil to China.
Not until I see that a huge corrective pattern has taken place can I turn bullish on WTI oil again.