Fundamental Analysis & Overview
OPEC, the cartel of petroleum exporting nations, are holding meetings today, the 22nd of June 2018.
This meeting is held as usual in Vienna and it will most likely have a direct impact on the price of crude oil.
The United Arab Emirates oil minister, who is also the President of OPEC, stated recently that the oil market is getting closer to re-balancing. This could come in line with the “warning” coming from the International Energy Agency (IEA), which said that unless global oil production would increase, it could hurt the oil markets. Growing demand throughout 2018 and 2019 could result in a potential problem if oil prices would continue rising without a higher supply.
On May 25th 2018 the OPEC’s key producers, Saudi Arabia and Russia discussed several topics, with their oil ministers coming up with a proposal to increase the oil production over the rest of 2018.
Iraq has been recently on the opposition side, however, the country has been producing beyond its allocation since the previous production cuts began. Recently Iraq oil minister stated: “”I am confident that we will reach some sort of agreement”.
Almost all OPEC members seem to be in line with reaching an agreement and the most recent deal proposal which reflects a 1 million barrels/day output rise.
The main drawdown in this deal represents Iran, with the Iranian oil minister walking out the meeting after one hour, and opposed the production rise.
At this current stage, the sentiment for this event remains positive and promising, with the OPEC pointing towards a possible agreement, even without Iran.
If a production rise deal would take place, this could result in a rise in supply, therefore possibly sending oil prices lower.
Technical Analysis – Elliott Wave
The WTI charts also seems to be agreeing with a possible bearish outcome today, as the recent bearish break-out points towards more weakness as a hypothetical scenario.
Waves & Recap
During the month of May 2018, WTI peaked at $72.87 per barrel. The sharp and aggressive fall then followed, which was mentioned in the previously posted “USD Bulls Vs Bullfighters – Patterns At Decisive Levels” article but also timed with the “Market Juncture – Crucial USD Decision” video (min 7:32).
WTI – 4H Chart
The fall in WTI unfolded as a 3 swings sequence, labeled as Minute A (red). From an Elliott Wave perspective, this could lead towards the possibility that the bearish correction could become more complex and could also fall more.
During the shelf-life of Minute A (red) the “EUR & XAU Bulls Awaiting Their Turn” video (min 14:31) was posted, in which a possible bearish break-out of the lower channel trend-line was shared. The bearish break-out occurred indeed and finalized Minute A (red), also timed and followed-up with the “Preparing For The Non-Farm Payrolls, The Elliott Way” article.
Minute B (red) unfolded within a rising channel, below the break-out points. It has been labeled as a simple Minuette (a) (b) (c) (orange) correction, with an ending diagonal in Minuette (c) (orange. The ending diagonal was a tempting sign for more down-side possible, hence the reason for the bearish view on WTI with the “June FED Rate Hike – Fundamental Vs Technical Analysis” article.
The most recent drop in crude oil prices reached as low as $63.62 per barrel, a view which was commented during the “Risk-Off Events And Fundamentals Effect – Elliott Wave Technical Analysis” video (min 13.32).
Taking a closer look now at the WTI 4H chart, it seems as if the most recent attempt to rise could represent a Minuette wave (ii) (black) correction. If the wave count would turn out to be correct, then that could lead towards a bearish impulse in Minuette (iii) (black), sending WTI even lower, towards $60.50 or even $57.50 per barrel.
Many pips ahead!