· WTI Crude Oil printed an evening star candlestick pattern off the 38.2% Fibonacci retracement of the decline since September 30th (when the oil sell-off really got underway). Stars have been especially bearish recently with at least the last 4 stars on the daily time frame all resulting in Multi-day declines over the subsequent days.
· Also, at current juncture, price seems to have made an important top (around $62). A possible bearish SHARK harmonic pattern is indicating reversal.
· Looking at the Elliot wave perspective. We have seen an impulsive run up in the price from the bottom of 42. and prices have either completed wave C or it has completed wave III, C, which in either case calls for an retracement.
Here are 3 reasons to expect a pullback in crude oil over the near term:
· Storage levels remain at record extremes. Oil stockpiles have surged by 103.5mn barrels the course of the year, with the current levels reported at more than 80 year high. Total non‐OPEC output continues to grow, with the March production figure stated at 57.09mbpd, higher the prior month reading of 57.05mbpd
· On the OPEC side, the cartel is consistently producing more the official quota of 30mbpd, with the March levels reported at 31.029mbpd. Saudi Arabia has been instrumental in compensating for the production losses emanating from the insurgency in some parts of the Middle East. There has been some improvement on the Libyan side as well; with production is nearing 500,000bpd, higher from 250,000bpd in February.
· On global front, Energy Intelligence numbers state that global markets during the first three months of this year witnessed a surplus of 2.3mbpd, much higher than the surplus of 1.2mbpd during the entire 2014.