2-3 May Crude Oil Forecast after Russia output cut


Russia to cut its Oil output by 300,790 B/D as of 1st May in line with the OPEC deal. This agreement was to safe Oil prices from further drops. The following presents Crude Oil Forecast after Russia output cut and the technical view of what could happen by the end of the first half of the year.

03 May, AtoZForex    Compared to the output recorded in December 2016, Oil output in Russia has dropped by 300.8k B/D. In April alone, it dropped by 258.6K B/D at an average according to a source in Russian energy ministry. All these in an effort to meet with the agreement with OPEC. Russia agreed to cut its oil output by 300,000 barrels per day under the OPEC deal signed in Vienna and set April as a target to achieve that.

In November 2016, OPEC agreed to cut Oil output and later met with Non-OPEC Oil producers in December  of the same year. This was in an effort to safe Oil prices from further drops. OPEC agreed to cut production by 1.2 million B/D from January 1 with their largest producer, Saudi Arabia cutting by 486k B/D. Many non-OPEC members including Russia also agreed to cut their production for the first 6 months of the year extendable by another 6 months.

Crude Oil Forecast after Russia output cut: technical view

Earlier, we made a bullish forecast for Crude Oil. Price was at $48 and we forecast a rally as advances were made to complete a diagonal pattern. The chart below was used.

Crude Oil quarterly Elliott wave forecast Crude Oil Elliott wave analysis, H4 (click to zoom)

A rally is very likely to spring from the current level toward $58 in the coming weeks. At $58-$60, another wild fall could happen if the diagonal completes. Diagonal patterns are famous for wild high momentum moves.

There was a rally. The rally was expected to be a zigzag or a complex bullish corrective pattern. When price rallied above $53, it was expected that price makes a dip before continuing moving upside. We expressed that in a new update with the chart shown below.

Crude Oil Elliott wave Forecast Crude Oil Elliott wave analysis, H4 (click to zoom)

The chart above shows that the dip should stay above the starting point of wave a of 5 just below $48 if the diagonal pattern will complete properly. The chart below shows the dip running very dip and probably could break below $48. The recent wave count is shown by the chart below.

Crude Oil Forecast after Russia output cut: what next?

Crude Oil Forecast after Russia output cut Crude Oil Elliott wave analysis, D1 (click to zoom)

If price breaks below $47, it could actually mean that the diagonal has completed at $53.7 with a truncated 5th wave. A 3-wave correction to $40 may be seen to complete larger degree wave (ii) before a very strong rally push price to a new high above $75 P/B.

Crude Oil Forecast after Russia output cut Crude Oil Elliott wave analysis, H1 (click to zoom)

If price stays above $47 and breaks above the trendline shown above. The b-wave will be confirmed completed before further rallies to $58-$60 immediate target.

With the implementation of the Oil production cut deal, price will at a point rally fast. One of the scenarios painted above has a very high likelihood of playing out. Take note. More updates will come later.

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