Oil – Weekly Analysis (free read)
Hormuz tolls, Strategic Petroleum Reserve drawdowns, political headlines, and daily noise may dominate the discussion, but our focus remains where it has always been: the technicals.
In this weekly report, we step back from the headlines and review the latest oil signals, the statistical studies behind the current setup, and the scenarios most likely to shape oil’s next decisive move.
CANDLES and TA
Brent and WTI closed the week with neutral candle signals. While the daily frame is bearish and the short-term technicals support a move lower, the weekly frame now needs a directional decision.
We should remember that oil closed May with Bearish Engulfing candles, while the larger 6M, 4M, and 2M frames remain bullish. In order to extend bearish odds to those larger frames, oil would need another monthly decline of more than 17% to shift all of them bearish together.
Overall, oil is bearish in the short term, bearish-neutral in the mid and long term, but still bullish on the very long-term frames.
Historical
For now, I will keep the working mid/long term hypothesis that I outlined on May 27:
“Does this mean oil is about to go against the 90% historical odds for bullish continuation after the recent 50/100-week MA bullish cross? At this point, I doubt it.
Even if both WTI and Brent close May with Bearish Engulfing candles, that would most likely mean oil could move lower in June, making the June candle the true decision maker on the 2M, 3M, and semiannual frames.”
The Statistical Analysis of the 50/100 WMA golden cross from May 25 can be reviewed here.
ELLIOTT WAVES
Brent – Long Term
On February 16, I presented a long-term forecast for Brent, noting that “if Brent follows historical precedent, a projected upside range of roughly $112–225 over the next 1.5 to 2 years would fall well within statistical expectations.”
Brent was initially rejected at the upper boundary of the long-term flag. However, momentum remains positive, and the odds of completing the structure in the coming months remain high.
The technicals continue to support the view that the current advance is wave 3 of some degree, either wave 3 of C or wave 3 of III, as shown on the chart. Under this framework, Brent at $180–200 no longer sounds like fantasy; it has solid Fibonacci support.
The May 15 bullish 50/100 WMA cross added another layer to the previously estimated targets. The statistically derived $133–194 range overlaps remarkably well with the broader Elliott Wave projections.
Last Wave – Brent
Brent failed to form an upward impulse, and a lower low now has a higher probability. The question is whether the blue or red count will be chosen. Both options remain on the table. The watershed level between the two scenarios remains $84.195.
Note that the wave downward is shaping as a potential Ending Diagonal. Once the bottom is formed, a sharp rally toward the level of origin, $113, would likely be next.
Strategic Petroleum Reserve – SPR
I have been following the recent SPR drawdown and would like to share these charts.
If the U.S. does not slow the pace of drawdowns, the Strategic Petroleum Reserve could fall below the 2023 and 1983 lows within the next two weeks. At the same pace, the estimated technical floor, around 166 million barrels, could be reached in September–October.
The broader picture is not much more comforting. South Korea and Japan are among the largest concerns. I am wondering whether the brutal KOSPI selloff is somehow related to a fresh realization that reserve bottoms are approaching and replacements are not readily available. This crisis could also become a major lesson for India, which looks especially vulnerable: if inflows are interrupted, the country has almost no reserve cushion for a population of that size.
This does not replace the technical oil view, but it adds an important physical-market backdrop. The market can debate headlines, but inventories and reserves are much harder to spin. They cannot be printed like currencies.
Summary:
Oil remains mixed across timeframes. Brent and WTI are bearish short-term, with daily signals still supporting more downside, but the weekly frame closed neutral and now needs a directional decision. The May Bearish Engulfing candles remain important, yet the larger 2M, 4M, and 6M frames are still bullish, meaning oil would need a much deeper monthly decline to shift the very large frames bearish.
From an Elliott Wave and statistical perspective, the long-term bullish case is not dead, but it has weakened. Brent failed to form an upward impulse, increasing the odds of a lower low, while the key watershed level between the blue and red scenarios remains $84.195. At the same time, the decline is shaping as a potential Ending Diagonal, which could eventually lead to a sharp rally back toward the level of origin near $113 once a bottom is formed.
The SPR and global reserve picture adds an important physical-market backdrop. U.S. SPR drawdowns, possible tests of historic lows, and vulnerable reserve positions in countries such as South Korea, Japan, and India do not replace the technical view, but they reinforce the broader risk environment. Overall, oil is bearish short-term, bearish-neutral in the mid and long term, but still supported on the very long-term frames unless the larger structure breaks.
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For investors who want to follow both the technical and physical-market sides of this story more closely, we have reintroduced the Energy package for a limited time. It includes daily and weekly analytics on Oil and Natural Gas, helping members track the signals, scenarios, and key levels as this unusually important energy setup continues to develop.
