Crude Oil Forecast: WTI in Position to Overcome $50.0 Again

For the past few weeks, WTI crude oil has been trading in a tight range as it tries to sort through recent events and fundamental factors. Reports indicate Monday’s close at a 10-month high was due to concerns over continued supply disruptions and speculation that the Federal Reserve will not raise interest rates this month.

From a technical perspective, the recent wave formations show that prices are poised to rise to targets above $50.0 over the next few days before reaching the next major decision point in the mid-$50s. July WTI closed above the 0.618 projection of the wave up from $47.26 on Monday. Waves that overcome the 0.618 projection typically extend to at least the 1.00 projection, in this case $50.7. Therefore, odds favor a test of $50.7. A close over $50.7 would call for $51.8 and possibly higher this week.

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Support at $48.4 should hold. This is the 0.618 projection of the wave down from $50.21. It is also near the 62 percent retracement of the move up from $47.75 to $49.9. A close below $48.4 would call for a test of $47.5, which is near the bottom of the recent trading range. A close below this would open the way for an extended correction to $46.2 and possibly lower.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

Reports indicate traders and investors have been focused on the return of crude oil from recent worldwide supply disruptions, primarily in Canada and Nigeria, in addition to swelling output from Iran. The rising U.S. dollar has also put bearish pressure on prices after the Fed’s latest policy meeting notes suggested a June rate hike possible.

From a technical standpoint, WTI reached significant targets just below $50.0 late last week before forming daily bearish divergences and daily hanging men. These factors indicate the move up is exhausted. However, so far, July WTI’s decline from $49.56 has been extremely choppy and is most likely corrective.

The correction has held the 38 percent retracement from $43.65 to $49.56, but is positioned to extend a bit lower. There is highly confluent support at $46.8, which will likely be met before the move up continues. A close below $46.8 would call for an extended correction to $45.6.

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That said, the move up from $47.4 on Monday shows that prices should test $48.6 early Tuesday before attempting $46.8 again. This level should hold, but a close over $48.6 would open the way for $49.2. A close over $49.2, would indicate the downward correction is most likely over and call for $50.2 and higher.

In summary, look for a test of $47.4 followed by $46.8. A close beyond either of these levels will give the market a better sense of near-term direction and how low the correction will extend before prices ultimately turn higher again.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

Supply disruptions due to wildfires in Alberta and militant attacks in Nigeria were reportedly offsetting rising stockpiles of crude oil and surging OPEC output. However, those factors seem to be easing, and may not have as much of an impact on supply as originally indicated.

U.S. crude inventories reached their highest level since 1929, but rig counts continue to decline and U.S. output reportedly dropped the most in eight months during the week ended April 29.

Some analysts and traders believe the move up may have been too much too fast, and that the market is taking a much needed breather after rising four weeks in a row prior to last week. Sentiment is also becoming more negative, indicating the move down should extend.

June WTI crude oil challenged key resistance at $46.1 a few times over the past several days. This level has held so far, and should continue to hold as the corrective move down extends. The wave formations down from $46.78 and $46.07 indicate June should decline to at least $42.5. This is a confluent wave projection and the last major swing low. A close below $42.5 would call for $42.0 and lower.

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That said, at this point, we do not foresee that prices will fall apart. We expect trading to remain choppy. Look for $44.3 to hold upon a test of resistance early tomorrow before the decline continues. Crucial resistance for tomorrow is $44.9. We doubt prices will rise this high unless spurred by random events. Key resistance remains $46.1. A close above $46.1 would indicate the correction is over, and in turn, open the way for the next leg higher.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

The crude oil price surge over the last few weeks was reportedly due to slipping U.S. production, a weaker U.S. dollar, and several production outages. However, some pundits are growing concerned that swelling OPEC output could keep the market oversupplied and turn prices lower.

The move up stalled near a highly confluent $46.0 target late last week, and June WTI challenged crucial support at $44.5 on Monday. This is near the 1.00 projection of the wave $46.78 – 45.24 – 46.15, and is in line with the prior swing high of $44.49.

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In addition, Friday’s bearish Harami line and star was confirmed and several bearish divergences were triggered on Monday.

At this point, there is no strong technical evidence that the pullback will end. Therefore, the move down should extend to at least $43.7, $42.9, and possibly $41.9 over the next few days

That said, at this point the move down is corrective, and unless the $42.5 swing low is taken out, longer-term odds will favor the move up. A close over the $46.15 swing high will shift near-term odds back in favor of $48.0.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

Late last week, June WTI crude oil challenged key resistance at $44.5. This is a confluence point, and most importantly, the 1.618 projection of Wave I (not shown), $30.79 – 38.52 – 32.1. A close over $44.5 will open the way for the next leg higher, which could push WTI crude oil prices into the upper $40s and possibly the low $50s.

That said, a small double top formed near $44.5 on Friday and was confirmed Monday upon the close below $43.05. The confirmed double top and waves down from $44.49 and $44.45 call for the pullback to extend to at least $42.1 and likely a confluence area near $41.6.

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The move down has been shallow and choppy though, indicating it is most likely corrective of the move up. Unless $41.6 is taken out on a sustained closing basis, we still expect prices to attempt to overcome $44.5 again. A move above $43.3 in early trading tomorrow would call for $43.8 and possibly $44.5.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

The failure to reach an agreement to freeze crude oil output levels for key producers caused prices to slide in early trading Monday. June WTI gapped down from Friday’s $41.19 low and met crucial support at $39.0. However, the labor strike in Kuwait, which has decreased the nation’s output by nearly 60 percent for the second straight day, lent support to the market. June WTI rose to $41.66 and settled at $41.19 on Monday.

The bounce to $41.66 filled the gap and fulfilled the 1.00 projection of the wave $39.0 – 40.92 – 39.81. The move up may gather some strength from the strike in Kuwait and extend a bit higher on Tuesday. However, from a technical standpoint, the move up from $39.0 was not unusual. Gaps are usually filled, and as stated, the move up from $39.0 has already met technical resistance near $41.66.

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Without support from bullish fundamentals or further random events (such as the strike in Kuwait), we expect prices to grind their way lower to support at $40.6 and $40.0 over the next few days. $39.0 remains key, and a close below this would open the way for major support in the mid $30s.

That said, a close over $41.7 would call for $42.5 and possibly $42.9. At this point, we don’t expect to see prices rise above $42.9.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

The highly anticipated and headline grabbing April 17 meeting between OPEC and non-OPEC nations has set the stage for crude oil’s rally. However, some traders and pundits still think the world is awash in oil and an out-put freeze has already been priced in. They anticipate an agreement to freeze production—if reached—would have little near-term impact.

Others believe slipping U.S. oil production is the most likely and more logical culprit for the price rise and could continue to lead the way higher. In addition, the sliding U.S. dollar and Federal Reserve officials’ optimistic statements on Friday morning regarding the U.S. economy and flat interest rates have also been interpreted as bullish.

From a technical standpoint the move up is poised to continue. Last week, WTI held the 62 percent retracement of the move up from $30.67 to $42.49 when prices fell to $35.24. This was important because the move up from $30.67 forms Wave III of a potential five-wave pattern. WTI is now forming a potential Wave V, but must overcome key resistance at $42.8 to prove that is the case. $42.8 is a confluent projection for Waves I and III, so a close over this would shed a much more bullish light on WTI.

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Look for initial resistance at $40.9 and $41.6. These are important projections for the wave up from $35.24 and potential stalling points. We expect to see at least a small pullback (21 to 38 percent retracement) once $41.6 is met. A close over $41.6 will significantly increase the odds of challenging $42.8,

Look for support at $38.7 and $37.3. A close below $37.3 would indicate the move up has likely failed, and that another test of $35.2 will take place.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

Saudi Arabia once again made clear they will only freeze output at current levels if other nations, including Iran, also do so. Iran has balked at the idea and stated objections on numerous occasions. Reports indicate this came as a shock to bullish oil traders, some of whom had thought the Saudi’s softened their tone and have been more willing to discuss a deal.

On Friday, May WTI futures finally closed below crucial support at $37.8. The move down extended on Monday and is quickly closing in on crucial support at $35.3. This is a confluent wave projection for the waves down from $42.49, $39.85, and $39.04. It is also near the 62 percent retracement of the move up from $30.67 to $42.49.

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The confluence of projections and retracements at $35.3 make it a potential stalling point. However, so far, the market has not shown reason to believe the recent decline will end. A close below $35.3 would open the way for $33.6 and lower where extremely important targets protecting the May contract low will be tested.

Prices will likely bounce soon, but that will not mean that the move down is over. Look for initial resistance at $36.6 and key near-term resistance at $38.2. We expect that for the time being there will be plenty of selling pressure upon retracements to these levels.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

Since early February, RBOB gasoline futures have been trending higher, forming a five-wave pattern. We follow a few simple rules when breaking down a five-wave move. Generally, each of the impulse waves (I, III, V) have to be proportional to one another, each of the impulse waves should break down into five-sub-waves, and most importantly, at least two of the impulse waves should be equal.

The May gasoline contract is nearing a very important decision point at 159.5. This is the 0.618 projection of Wave III. Stalling at 159.5 would fulfill our requirements for a five-wave trend because Waves I and V would be equal. In addition, Wave III would be 1.618 the size of Waves I and V.

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Should May gasoline futures close over 159.5, look for 171.0. This is the 2.764 projection for Wave I and the 1.00 projection for Wave III. In this case Waves III and V would be equal.

For the move up to extend to 159.5 in the near-term the 141.61 swing low of Wave IV should hold. This is also near the 38 percent retracement of the move up from 114.88. A close below this would call for 134.4 and likely 129.8.

Right now it appears as though the move up should continue to at least 159.5. Currently, gasoline’s rise is likely supporting crude oil prices too. Therefore, if the move up fails, and gasoline prices fall, they may also lead crude oil prices lower.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI’s move up has been resilient for the past few weeks. The waves up from $29.85 may be interpreted as either a five-wave trend that is still forming Wave III or a three wave correction that has nearly completed Wave C. Technical factors indicate May WTI is approaching a decision point at $43.1.

In either case, whether the move is five waves or three waves, Wave A or I should meet the 1.618 projection at $43.1. A correction should then take place. The correction will determine whether or not the move up is a five-wave trend.

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Key support will be $38.0. This is the 38 percent retracement and is in line with the $37.52 swing high of Wave A or I.

A close below $38.0 would indicate the move up from $29.85 was a three wave correction. There is no evidence yet that prices will plummet to new lows. Therefore, upon a close below $38.0, a trading range in the mid-$30 is the most likely scenario.

Should prices hold above $38.0 and subsequently close over $43.1, the move up is most likely a five-wave pattern that will extend toward the 2.764 projection of $51.9. A move of this magnitude will take time, and should form another sub five-wave count like Wave III has. It will also likely be backed by a positive shift in underlying fundamentals.

This is a brief analysis and outlook for the next day or so. Our weekly Crude Oil Commentary is a much more detailed and thorough energy price forecast. If you are interested in learning more, please sign up for a complimentary four-week trial.