Crude Oil Reverses its Gains

The price of Crude Oil turns negative in its first trading session of the week dragged by the IMF world growth estimate cut.

Crude Oil retraces 7 cents or 0.12% touching $58.67 per barrel, while Brent Oil advances 10 cents or 0.16% raising to $65.16 per barrel.

The International Monetary Fund (IMF) turned more pessimistic on Monday in the World Economic Forum developed in Davos.

The IMF warned that global perspectives continue being sluggish and do not foresee any recovery sign in the short-term. The institution that, in October 2019,  projected a growth of 3.4% for 2020, cut its projections to 3.3% for 2020.

IMF representatives noted that there is still no recovery for the global economy. However, some of the significant risk factors for the global economy have receded.

Technical Overview

Crude Oil, in its daily chart, exposes the long-term corrective process that the energy commodity develops since the early second quarter of 2019.

 The long-term consolidation structure looks like an incomplete triangle formation. The first bearish leg of the corrective sequence began on April 23rd, 2019, when the price reached $66.58 per barrel. 

Once reached the 2019's high, Crude Oild started to decline in a corrective zig-zag pattern (5-3-5) and ended at $50.63.

 In terms of the Elliott wave analysis, Crude Oil runs in a bearish leg (C) of intermediate degree labeled in blue. The current bearish movement began on January 08th, 2020, when the price found sellers at $65.62 per barrel.

The following chart shows Crude Oil in its 4-hour chart. From the figure, there we observe that the price runs in a wave B of Minor degree labeled in green.

According to the wave theory, a wave B of a corrective formation holds a three-wave internal sequence. In consequence, Crude Oil should develop a new marginal upside, which could bring the opportunity for bearish trades, looking for a further downward leg.

From the Alternation principle's perspective, in view that the first bearish segment was developed in a fast sequence, the next segments B and C should progress at a slower pace than the first leg.

In conclusion, the Crude Oil price could develop a new marginal rise. This movement could be indicative of more weakness for the mid-term. However, we don't expect declines below the August 07th, 2019 low at $50.55 per barrel.