Crude oil crashed this morning, but it crashed in a rather sharp straight down type of a pattern. This is more a corrective move, then anything else. I will not put multiple alternatives in one chart as it is pretty common knowledge that there will always be alternates. Every post I make is always a new chart as all patterns get reviewed on a constant basis. One thing I can say is that the decline that started at the end of April is correct after all, so eventually crude oil will travel much higher but we have to put up with the corrections when they happen.
Even oil can be in a diagonal bull market so we have to be aware of that as well. We are not anywhere near enough to a halfway point of this bullish run, but when we do get there we could be in for another ugly correction. The faster any move makes up, the uglier the correction can be.
I am working through a potential “ABC” that still may go sideways before another big drop. Oil only has less than $1 to move down.
If you have read news about the Fort McMurray fires we know that it is one of the biggest natural disasters in Canada at this time. Fire near the oil sands should not be a problem as all the plants have their own fire crews on standby. Any fire into the oil sands creates a cap and will not burn down like coal can do.
In the end 1 million barrels of crude oil production per day, have been taken off line or can’t be produced. It is the insurer’s that will take the biggest hits and that is some of the banks that will be affected.