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Crude Oil Soars to 13-Month Highs: What's More Perfect than A "Perfect" Bullish Storm?

Oil's recent gains are the result of Elliott wave patterns, NOT weather patterns

by Nico Isaac
Updated: February 17, 2021

There's a funny but true saying that goes something like,

"If you want to know whether to plan a picnic for tomorrow, don't ask a meteorologist. Ask an energy market analyst."

The reason is: Of all the "fundamental" factors supposedly driving oil prices, weather is in the top five; specifically, how certain weather events adversely affect the well-oiled machine of oil production.

Take, for instance, the events of February 15. On that day, crude oil soared to its highest level in 13 months. And, according to the swath of mainstream news reports, the single biggest catalyst for oil's rally was the "monster" winter storms that ripped through the Gulf of Mexico over the weekend of February 13-14.

True: The record-shattering blizzard barreled through parts of western Texas, the nation's black gold capital, freezing out 15% or 1 million barrels per day of oil the Permian Basin's oil production. Here is one of the day's headlines building a giant snow-bull on the storm's back:

"Oil Prices Spike on Rare Texas Winter Storm - "The energy market is being hit with a perfect storm as extreme winter weather whacks the state of Texas and may linger for the next several days. (Feb. 15 Fox Business)

Make no mistake: The likes of the February 13 winter storm, named Uri, that struck the coast of Texas haven't been seen in that region in decades. The area was pummeled by record-low temperatures and record-high snowfall, and the effects on energy industry's infrastructure are catastrophic.

But as this chart of oil prices show, that storm didn't strike until February 13, right at the end of the uptrend you see on this chart -- the same uptrend that has been underway since late January.

Crude Oil - Continuation - 4 hour - 2-15-21

To say oil's recent rally to one-year highs is a direct result of Storm Uri is the kind of post-facto reasoning for price moves we often get with fundamental analysis. It sees this event de force, a historic winter storm in the heart of oil country and uses it to explain a giant rally in oil prices that started much, much earlier.

But if we zoom back to the start of oil's recent surge, we do find the bullish writing on the wall of our January 22 Energy Pro Service. There, our chief energy analyst Steve Craig identified the start of a wave 5 rally to new highs and said:

"At a minimum, wave ((v)) of 5 should carry prices past the 53.93 continuation rebound high in five distinct waves... Resistance above there is sparse until 65.65."

Crude Oil - Continuation - 4 hour - 1-22-21

Note that our Energy Pro Service posted this forecast three weeks before the first drop of snow of Uri's eventual blizzard touched the ground of West Texas.

From there, oil prices indeed followed their fifth wave rally script, soaring to the 13-month high of February 15.

According to the weather, another storm front is slated to hit the Texas oil region again later this week. But, as this example shows, for oil traders, the question as to whether oil prices are set to continue higher -- or reverse -- won't necessarily depend on the unfolding storm; but rather, the unfolding wave pattern of market psychology on oil's price chart.

Get in front of oil's near- and long-term trend changes today with our Energy Pro Service.

Finding Your Opportunity in a Blizzard of Misdirection

You've just seen why oil traders who follow the weather for clues as to future price moves often are left out in the cold.

Sure, the weather can and does impact oil prices. But market psychology hits harder.

The good news is, psychology follows Elliott wave patterns.

And right now, our Energy Pro Service radar is lit up like a Christmas Tree with actionable setups on the price charts of the world's leading energy markets -- on intraday, daily, and weekly time frames.

These opportunities wait for no one -- so see our latest Energy Pro Service forecasts today.

4 ways EWI's Energy Pro Service lets you trade with more confidence

If it's a major energy market, we'll help you stay on top of it.

1. You Get Timely Intraday and Daily Forecasts

Your Energy Pro Service subscription puts a veteran energy market expert in your corner. His goal is to make sure that day-by-day, hour-by-hour, you see the very latest Elliott wave picture. You get intensive intraday coverage to help you catch near-term opportunities and daily forecasts that let you get in front of longer-term waves.

Markets covered: NYMEX: crude oil, natgas, unleaded, heating oil; ICE Brent; energy ETFs (XLE, etc.)

2. You’re Ready for All Probabilities with Video Overviews

Once a week or more, editor Steve Craig records new video market overviews to show you ALL Elliott wave counts for the Energy complex. You see his outlook in detail – plus, any strong alternatives that may enter the picture. Result: You’re prepared to act on all probabilities.

3. You Get Essential Weekly Perspective

Context is key. Your Energy Pro Service subscription gives you big-picture analysis to help you ride major trends – trends that can last years. This essential perspective puts the near-term moves into context. Together, you get a comprehensive Elliott wave picture for the energy markets at every degree of trend.

4. You Become Part of an Exclusive Community of Savvy Elliott Wave Traders

We're on your side and working for you. If you have a question about the Wave Principle or our analysis, just send us an email. A team member will get back to you. If it makes sense for the answer to be shared with your Pro Service peers, we'll do so (confidentially, of course). If you're having a hard time grasping an Elliott wave concept, our Educational Consultant will find the best resource for you and send it along. We know that we're successful when you are successful. We do everything in our power to make sure that happens.

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See What Predicted Commodities’ Recent Drop

Commodity prices have taken a tumble during the past several days. A financial website says the decline is due to the "China crackdown" and "rising dollar." Yet, Elliott wave analysis foretold of the price drop when commodities were still rallying. Take a look at this chart.

Traders: Don't Look to a Company's Profile; Look to its Price Chart

See the Trader’s Classroom forecast and Elliott wave pattern that anticipated a rally which saw US Steel nearly double in price.

“Everybody’s Getting Rich (and Having Fun) Except Me”

Ever heard of the acronym FOBI? It was coined here at Elliott Wave International and stands for the "fear of being in." Yes, just the opposite of the better-known acronym FOMO (fear of missing out). Here's an explanation.