Wednesday, February 18, 2015

WTI Prepping for a Break; Up.

Still a whole lotta hatin' going on. BP joined the chorus yesterday in their annual energy outlook, which provides a 20-year forecast of the market, stating,
"The current weakness in the oil market, which stems in large part from strong growth in tight oil production in the U.S., is likely to take several years to work through,".
 Thank you.

Meanwhile WTI is winding up for a break to new highs above the 54.24 resistance. 
15 min
 click to enlarge
The 2 wave is a .58 retrace and the -2- wave is 50%.

If this is indeed a coiling series of 2 waves with a break up to come shortly, I would expect the
.618 retrace (or something approximate) to hold. Overlapping the low $50.81 negates that count and opens up a potential move towards the lower end of the range.

On the break up above 54.24 targets would include 
3=1 at 58.60
3=1.618 of 1 at 65.11
 The .236 retrace of 107.50 to 43.58 is at 58.82
The .382 retrace of 107 to 43.58 is at 69.

Thursday, February 12, 2015

Obama's Saudi Visits, Oil and Russia

Last nights concerted effort produced something positive in the Ukraine crises. This may coincidentally produce something positive for the price of oil.
Please note the following timeline coincidence;
1 March 2014: Russia's parliament approves President Vladimir Putin's request to use force in Ukraine to protect Russian interests.
 16 March 2014: Crimea's secession referendum on joining Russia is backed by 97% of voters, organisers say, but vote condemned by West as a sham.
18 March 2014: President Putin signs a bill to absorb Crimea into the Russian Federation.
28 March 2014: President Obama visits Saudi Arabia.

June 2014 : Oil begins collapse.

27 January 2015:  President Obama visits Saudi Arabia.
31 January 2015 : Oil reverses price decline.
11 February 2015: President Obama introduces ISIS War Powers Act.
12 February 2015: Ukraine Cease Fire.

As an Elliott Waver I don't assign causality, and in fact the influence of the above geopolitical events on the Eur/USD probably explains most of the WTI move, but "just sayin".

Wednesday, February 11, 2015

Crude Oil Update

 This rally began from a Fibonacci significant point, accompanied by huge volume in what can only be described as a powerful thrust up producing a 24% increase in price over 4 days. 

Have we seen the lows, or is this a sell the rally moment?
I think we've seen a major reversal for the above reasons . (Please see the previous post for the Fibonacci rational for this rally.) The fact that major players are looking for much lower prices is a reason to be bullish; presumably they and their clients are now short or at least not long. 

 Monthly continuation

The most likely wave count as labeled above has WTI at the lower side of the range, within a consolidation of the dramatic wave 1 down. The market is still digesting that 114 point move. Another major move up, the "C"is likely to complete a 2 wave correction back up.
The alternative wave count is that rather than labeling the 2009 low as a 1, it is instead an "A". In that case the recent low now labeled B would instead be the "C" of a multiyear consolidation from the $148 high made in 2008.
Both counts would imply much higher prices.

click to enlarge
Even a relatively modest (given the volatility) .382 retrace of the last leg down, represents a pretty good real $$ and percent increase at $68.76

More importantly there is significant risk of a retest of the highs of the long term range; 114 or even 148, given the two alternative wave counts described above. 
Downside risk is somewhat more limited in real $ terms to $30ish, the previous low of the range. 
It is possible to see even lower numbers but I believe that will only occur AFTER either global political action to constrain fossil fuel usage, or worldwide economic depression...neither of which is showing up yet.

Meanwhile the recent thrust up has been consolidated in a classic abc pattern with fibonacci relationships between the legs. At least on more leg up to go whatever the wave count.