Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Crude Oil Forecast Summer 2009

Commodities / Crude Oil Jul 08, 2009 - 12:59 AM GMT

By: Nadeem_Walayat

Commodities

Best Financial Markets Analysis ArticleThis is a quick update to the analysis of December 2008 that projected an uptrend in the Crude Oil price into mid 2009 targeting $75, to be followed by a downtrend back below $50 towards $40 as illustrated by the original graph.


Crude Oil Summer Trend

Quick Technical Analysis - Crude oil hit its summer objective in June by peaking just shy of $74, following which it made a lower high at 73, and confirmed the downtrend on break below 66. The current action is expected to correct the bull run from $35 in December 2008, with the key consolidation zone of $47.5 to $55 which crude oil is homing in on to again form a base for the resumption of the rally into 2010. Therefore we have a price target zone of $47.50 to $55, the question now is how long will the downtrend last ? The downtrend appears to be projecting for a trend lower into late August / Early September, thereafter some sideways action could be in order before the rally gains traction later in the year.

Crude Oil Conclusion - Downtrend targeting $45 to $50 by start of September 2009, thereafter base building before the next leg higher.

The in depth update for crude oil will follow later, to ensure you receive this in your email box subscribe to my always free newsletter.

Crude Oil Mega-Trend - The long-term mega-trend is for much higher crude oil prices, we will probably see see the $200 oil price that Goldman Sachs were calling and distributing into as crude oil approached $150 last June. However as I pointed out in the analysis of December 2008 and iterated several times during the year that where oil is concerned 2009 will be the year for accumulating long-term investment position.

Therefore the trend to $45 gives long-term investors ANOTHER opportunity to accumulate into a mega-trend. Favoured routes are the oil ETF's , oil producers and explorers again spread your risk by using ETF's and investment trusts, and off course theirs Russia, a crashed stock market that has so far failed to recover despite the recent rebound in the oil price, again this would need to be a long-term exposure.

Leveraged ETF's Warning

I was going to write at depth as to why investors should steer well away from leveraged ETF's such as that for crude oil, where even if your RIGHT and the price of oil doubles as it did, you could STILL LOSE MONEY!, Leveraged ETF's should be avoided by all but ultra-short-term traders and I am talking about 1 to 3 days, any more and your trading the wrong vehicle, instead I see infuriating commentary on the internet targeting investors towards leveraged ETF's ! In my opinion THEY ARE A SCAM INVESTMENT DESIGNED TO PART YOU WITH YOUR MONEY. Short-term trading vehicle?, maybe, but Investment vehicle - NO!. Ron Rowland explained earlier in detail how they work - Understanding The Dangers of Leveraged ETF's.

Inflation / Deflation

The higher crude oil rose during the first half of 2009, the greater were the expectations for much higher inflation, in fact at the peak these tipped into many calls for hyperinflation. Now as crude oil has begun is downtrend the deflation argument has again come to the fore as the more dominant outlook.

My own analysis in the forecast for UK inflation for 2009 as of Dec 08, forecast that UK inflation as measured by the RPI index would fall to -1.2% by mid 2009 and thereafter see a return to mild inflation by year end to target +0.8%. UK inflation hit -1.2% in April and recorded a -1.1% rate for May, which is inline with the forecast and therefore we should continue to see a gradual trend out of deflation and towards a weak +0.8% RPI inflation rate by year end.

Therefore my conclusion remains that after deflation ends in the coming months, inflation looks set to remain weak into the end of 2009 and most likely for the first half of 2010 at least. I will elaborate up on the inflation outlook and forecast for 2010 later this year.

So I do not see forward signs of either deep deflation or hyperinflation, but rather weak inflation for the next 6 to 12 months.

Economy

The falling oil price acts as a stimulus to economy so should 'eventually' be positive for the stock market, the pattern of trend of which is expected to be inline with my outlook for the stock market.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Jas Singh
31 Jul 09, 15:30
Downside Target

Hi Nadeem

Do you still target a downside of $47.5 - $55 sometime in August/early September?

I pay particular respect to your target levels, you are consistently accurate.


David
13 Aug 09, 03:05
Oil at 70...

With oil at $70, do you still think it'll even be possible to go back to 50 by the end of the month.

I know you're quite a good economist, but I believe that this target is wrong.

I wonder if you're going to write an article to adjust the target ?

Kind Regards,

David.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules