USOIL Medium Term Update

3 jun 2023

I promised in the previous post that I would discuss medium-term charts.

I've been calling for an abrupt rise in ABC flat for a while now. However, price movements develop much more slowly than the human brain expects. I believe I read about this bias in books by R. Prechter on the fundamentals of Elliott Wave analysis.

This time, there is another layer of uncertainty because Brent did not follow WTI in the flash crash on May 4, which marked the local bottom (wave B low) for WTI but not for Brent.

While my expectation of the impending impulse wave C matches the WTI chart perfectly, it is not the same for Brent, where I anticipate an ending diagonal to complete the correction.


This weekend is the much-awaited OPEC+ meeting. However, as I mentioned in my previous post, I suspect limited progress in production-cut talks or a tepid market reaction to any agreed cuts. OPEC core members are grumbling about the cuts as Russia's seaborne exports hit all-time highs to markets that OPEC countries consider their fiefdom, forcing them to redirect volumes to the EU, missing out on shipping.

Therefore I doubt OPEC+ can come up with a decision that will drive oil prices sharply higher in June-July and keep them elevated by the end of the summer. OPEC+ decisions usually lag the market developments and tend to cause short-lived fluctuations at best (though painful when unexpected).

Instead, war drums and EU discussions about the 11th sanctions package could be the catalysts. The EU is considering prohibiting EU entities from purchasing refined products made of Russian oil. Read - India can no longer buy cheap Russian crude to produce diesel and ship to the EU.

I have some ideas about what it could mean for energy markets in the long run, which I will elaborate on in a website article.

4 jun 2023

Nota

The Saudis cut. Here's the updated near-term chart.