The price of oil and global economic growth
The same is true for inflation. The US CPI annualized for February was +1.7%. I.e. inflation is already quite close to the 2% target, which means that stimulus measures should at least be phased out soon, and at most, regulators may switch to a containment policy within the next 1-2 years.
The consequence of economic growth can certainly be gradual, but it should be understood that a sharp jump is unlikely to happen. The International Energy Agency presented a report in which it reported that oil demand will not recover to 2019 levels until 2023, but the forecast for 2021 is positive: growth of 5.5 million barrels per day is expected. Meanwhile, OPEC+ countries still see risks to demand recovery due to the uncertainty with the virus.
Alas, for a resumption of price growth, demand growth is a necessary but not sufficient factor. The second important condition is . According to the OPEC Monitoring Committee (JMMC), oil inventories are still above the average value for 2015-2019, but the departure of the surplus is forecasted not earlier than the end of the second quarter of this year. Again, we can only talk about this if the COVID factor recedes into the background.
On the monthly time interval there was a breakdown of the trend line upwards. The target of the movement was the level of 71.38, from which the rebound began later on. Thus, one more local maximum was formed. The resistance cluster is in the range $70-75. It was in this range that the price appeared in 2006, after which it rebounded downwards. Further in 2009-2010 this cluster has already acted as a support level.
Now we observe the return of the price to the broken trend line. I.e. it is quite possible that the price will be below $60 again.
In February the price tested the 200-month moving average on the monthly timeframe, but the bulls have not yet managed to break it up. If we pay attention to the "lower" weekly timeframe, we will notice that Willilams %R also entered the overbought zone, after which they reversed. This is a signal to sell. Using the Fibonacci correction levels, we can determine the targets for further price movement - $62.97, then $57.77 and finally $53.56, which is a 50% correction from the previous growth wave.
In our previous big review about oil from 07.01 we analyzed one of the scenarios of the Elliott Wave Theory. Since then, the situation has changed somewhat, but in general, so far, it corresponds to the built model. Let's look into it:
We must remember that we are looking at a monthly time frame, so it may take quite a long time for the formation of a correction and further impulse movement.
: the potential for growth continuation is preserved. However, it is quite possible that we will first see a corrective downward movement and only then a resumption of the rising impulse.