The complexity of oil and its movements seen from an Elliot-wave point of view integrating fundamental analysis. Where do you see oil moving? Leave a comment.
China surprised the markets Sunday night with its second cut to benchmark rates in three months. This should see oil and other commodities such as copper and iron ore trade higher as the cut in rates increases the demand on the energy industries, with investors believing that cheaper credit will stimulate demand.
Over the weekend Colombia’s finance minister said that the country was preparing for a "new normal" of between $60 to $70 per barrel. Yesterday the Mexican Economy Minister said that he expects oil prices to be between $50 and $60 per barrel next year. With oil prices falling to a five-and-a-half-year low in January the market attempted a rally before finishing last month only slightly higher than the January close at 49.76. So who be proved correct?
Even though crude rebounded in February to relieve some of the oversold technical we believe that oil can rally a little more in the coming weeks. Yesterday Saudi Arabia announced an increase in output by 130,000 bpd reaching its highest output level since September 2013. Yet oil, after an initial sell off of 2%, rebounded again off its lows, at one point reaching 2% up before closing the day higher.
With the market continuing to fail around the $54/$55 level we need to look for a 5-wave move higher to confirm that the correction is finally over. One of the hallmarks of a wave 3 is the obviousness of fundamentals. By this we mean that all the news out there is in the same direction and priced in. Crude supply and demand levels are discussed daily and according to the Energy Information Administration, US crude oil supplies are at 80-year highs. This has resulted in several of the companies involved in drilling and exploration reducing their investment into new wells. Also several companies have announced a delay in plans to complete wells that have already been drilled, in order to preserve cash.
Also another guideline of Elliott wave is that markets often bottom when all the news is bleak. So if we include yesterday’s sharp reversal we are looking for the next leg up in this wave-4 correction. Longer term however we are expecting a final push lower as supply from the middle east continues at pace for a move toward $25-$30 before a long-term bottom is in place, and the halt of all this oil exploration and lack of new wells coming online pushes us all the way back above $100. So at some point in the future there will be two very happy economy ministers in South America.
China surprised the markets Sunday night with its second cut to benchmark rates in three months. This should see oil and other commodities such as copper and iron ore trade higher as the cut in rates increases the demand on the energy industries, with investors believing that cheaper credit will stimulate demand.
Over the weekend Colombia’s finance minister said that the country was preparing for a "new normal" of between $60 to $70 per barrel. Yesterday the Mexican Economy Minister said that he expects oil prices to be between $50 and $60 per barrel next year. With oil prices falling to a five-and-a-half-year low in January the market attempted a rally before finishing last month only slightly higher than the January close at 49.76. So who be proved correct?
Even though crude rebounded in February to relieve some of the oversold technical we believe that oil can rally a little more in the coming weeks. Yesterday Saudi Arabia announced an increase in output by 130,000 bpd reaching its highest output level since September 2013. Yet oil, after an initial sell off of 2%, rebounded again off its lows, at one point reaching 2% up before closing the day higher.
With the market continuing to fail around the $54/$55 level we need to look for a 5-wave move higher to confirm that the correction is finally over. One of the hallmarks of a wave 3 is the obviousness of fundamentals. By this we mean that all the news out there is in the same direction and priced in. Crude supply and demand levels are discussed daily and according to the Energy Information Administration, US crude oil supplies are at 80-year highs. This has resulted in several of the companies involved in drilling and exploration reducing their investment into new wells. Also several companies have announced a delay in plans to complete wells that have already been drilled, in order to preserve cash.
Also another guideline of Elliott wave is that markets often bottom when all the news is bleak. So if we include yesterday’s sharp reversal we are looking for the next leg up in this wave-4 correction. Longer term however we are expecting a final push lower as supply from the middle east continues at pace for a move toward $25-$30 before a long-term bottom is in place, and the halt of all this oil exploration and lack of new wells coming online pushes us all the way back above $100. So at some point in the future there will be two very happy economy ministers in South America.
This article is written by Matthew Clark who is the owner of
Global Forex Pros.
ABOUT THE AUTHOR: Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker. Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real-time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker.
58% of UK Investors Choose Professional Guidance over 'Finfluencers’
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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