Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Peak Oil has Peaked, Crude Oil About to Rollover

Commodities / Crude Oil Aug 25, 2009 - 05:58 AM GMT

By: Adam_Brochert

Commodities

Best Financial Markets Analysis Articleand the price of crude is about to roll over. My previous piece on oil allowed for the possibility of a double top in crude oil, and I think that is what we are getting. A "big picture" overview of the oil bull market follows using a 12 year weekly log scale chart of the price of crude ($WTIC):




And here's a one year daily chart of the price of crude oil (as an aside, the next chart and prior chart only include action thru last Friday's close, as they were created this past weekend):



Lastly, here's a re-visit of the divergence between oil and oil stocks using a 6 month daily plot of both oil stocks (green area plot) and oil (black line plot) up thru yesterday's close:



Though it is certainly conceivable that oil and oil stocks could go a few bucks higher, they are now all but spent. The great oil bull market is over and has been since the top last summer. The bubble has burst, not to be blown again in our investing life times. Once a bubble bursts, it ain't coming back for decades. This is what I have been trying to tell anyone who will listen about real estate - just forget real estate as an overall investment class for 5-10 years (though every market may have unique individual opportunities). When inflation is finally created in the next business cycle, it will find a new market, not the one that just imploded and burned millions of "investors." Why is this? Human nature. Once bitten, twice shy.

The next plunge in crude will hopefully put an end to all the talk about "Peak Oil" for awhile. The fact that Chevy can even conceive of offering an electric hybrid-type vehicle (the Volt) in the next few years that may get 100-230 miles per gallon shows why the peak oil dilemma is bogus even in the near term. If Chevy can conceive of it, other better managed companies can actually do it and can do it much better and faster. Take that technology and put it in all cars, trucks and military vehicles. Then add further solar technology break throughs or maybe a nuclear/hydrogen advance or two. Then throw in a global economic depression to cripple demand for the next few years while these technologies are being developed, tested and implemented. Next thing you know, we don't have to worry about oil for another 20 years.

By then, who knows? Solar or nuclear-powered cars? Maybe we "stimulate" ourselves in America (and maybe in China, too) with multi-trillion dollar high-speed rail systems that link major cities throughout the country? Declare cars that get less than 100 miles per gallon illegal? Lord knows if America cut her consumption of oil significantly, that would solve the global problem for a decade by itself.

The point is that high oil prices are a tax on everyone and motivate people to change behaviors and innovate. Don't get me wrong, I read all the articles and data on peak oil and was initially concerned. I know how China and India want their cars, too. But now that I know a little about history, market cycles and bubbles (Peak Coal and Peak Food capped a few previous commodity cycles), I am much more concerned for the citizens of major oil-producing countries when oil goes back to $20/barrel. Keep in mind that a U.S. Dollar devaluation event could certainly alter the dynamics of the oil price for Americans in the future, but the global oil price, oil stocks and the price of crude in Gold terms are both headed for another leg down in their bear markets. Only the exact timing is in doubt in my mind for oil, not the outcome.

As an aside, I also think the next bubble will be in Gold and Gold miners (of course!). Keep in mind that oil went up fifteen fold over the past 10-12 years before its price collapsed, while Gold only went up four fold. I am still waiting patiently on Gold and Gold miners to correct further before considering putting new money to work in this sector via the long side.

Visit Adam Brochert’s blog: http://goldversuspaper.blogspot.com/

Adam Brochert
abrochert@yahoo.com
http://goldversuspaper.blogspot.com

BIO: Markets and cycles are my new hobby. I've seen the writing on the wall for the U.S. and the global economy and I am seeking financial salvation for myself (and anyone else who cares to listen) while Rome burns around us.

© 2009 Copyright Adam Brochert - All Rights Reserved
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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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


Comments

Rimu
29 Aug 09, 00:16
haha

That is some of the most laughable technical analysis I have seen. The trend lines are tenuous at best


Post Comment

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

6 Critical Money Making Rules