Oil Price Forecast: AI Algorithm Warned About Oil Prices Collapse

Gleb ZinkovskiyThis oil price market review was written by Gleb Zinkovskiy, Senior Financial Analyst at I Know First.

New Realm – Crude Oil Prices Futures Gone Negative

oil prices
Source: Wikimedia Commons
roy.luck / CC BY (https://creativecommons.org/licenses/by/2.0)

Oil and gas market has suffered major decline over the last couple of years. Times of prices $70 per barrel are gone and most of the recent OPEC+ discussions were circulating around efforts to keep the gears turning at $40 level on global scale. Around start of this Spring some traders expressed sentiments that excessive oil supply may cause some storage issues. However, the uncertainty around this subject was such that no one wanted to take responsibility to give any solid estimates on the WTI and BRENT futures prices until end of Spring to Summer of this year. Then May 2020 WTI delivery futures have gone negative.

crude oil drop

April 20, 2020 will go into history as the day when these WTI futures sunk at -$34 in the moment and closed the day at -$9 depth as the storage capacity in the main US oil facility in Cushing, Oklahoma, was completed at 76%. Way before this event, I Know First proprietary AI predictive algorithm issued significantly strong bearish signal for CME_CL1 continuous oil futures contract and USO oil price tracking fund with high predictability values. Therefore, this price crash did not come to our clients as a surprise – we successfully predicted it and allowed our clients to avoid significant losses.

What Are the Future Prospects for WTI and Brent Futures?

Although the drop was restored until the next day session, this appears to be a sign for the following oil futures contracts to loose value in a “domino-effect” manner. As such, both WTI and Brent futures contracts are on the downhill roll right now and our team expects the markets to continue this trend and more oil futures contracts to show significant deterioration in prices. We expect this market turmoil to have daily impact on the oil prices of all brands and it is reasonable to assume that all market participants will increase the competition to capture the maximum daily profits. For such frequent trading I Know First Stock Algorithm started to provide day-trading market forecasts which empowered our institutional clients to support their strategies and trading decisions on daily basis. The day-trading package is provided for time horizons ranging from 1 to 6 trading days and includes daily predictions for:

  • Main US stock market indexes (such as ^S&P500, ^IXIC, ^DJI, ^RUT, ^VIX)
  • ETFs (such as SPY, QQQ)
  • Major commodities (such as Oil and Gas, Gold)
  • And more…

Could AI Predict Oil Price Fall in March?

Was there anything similar between March 8 and and April 20 oil prices fall? Short answer – yes, and moreover, one is a partial consequence of another one. What is more important is that although March 8 event were significantly affected by politics in Saudi Arabia and Russia, it appears that initial OPEC+ deal break was only a trigger for a fundamental storm that hit the market as a result of major and radical change in oil demand, while the supply was overwhelmed by the price war. At I Know First our algorithm operated in statistical and correlational terms, so when our team and clients registered the bearish signal for all three oil benchmarks mentioned above it was the first ring-bell for action. Specifically, on March 5, 2020 the commodity market forecast for above three was:

It was not long for us and our subscribers to see the evidence of the AI predictive power foreseeing such dramatic changes:

oil prices ICE chart
oil prices CME chart
oil prices USO chart

Disclaimer: Please note-for trading decisions use the most recent forecast.

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I Know First, Ltd. is a financial technology company that provides daily investment forecasts based on an advanced, self-learning algorithm. Thus, the company’s algorithm predicts over 10,500 securities (and growing). Thus, it has capabilities to discover patterns in large sets of the historical stock market data.

The underlying technology of the algorithm based itself on Artificial Intelligence. It also based itself on machine learning and incorporating elements of artificial neural networks and genetic algorithms. Moreover, the algorithm generates daily market predictions for stocks, commodities, ETF’s, interest rates, currencies, and world indices for not only short but also for medium and long-term time horizons.

If you want to have access to more information about this topic, visit I Know First.

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