Crude Oil Price Bear Market Bottom? As WTIC Pops Back Over $30Commodities / Crude Oil Jan 22, 2016 - 07:38 AM GMT
The crude oil price hit a new low on Wednesday of just under $27, prompting many doom merchants to emerge to proclaim / reaffirm that $20 and even $10 is on the horizon. However, on following day the oil price rallied strongly to just shy of $30 to end Thursday at $29.85 and this morning has popped just above $30 to currently stand at $30.20. With the key question being asked is are we witnessing the early stages of an oil price bottom (WTIC) or is this just a few days of calm before the next oil price crash storm?
The oil price collapse has sparked panic amongst producers, with many now resigning themselves towards annihilation. For instance the head of BP, Bob Dudley warned that the oil price could fall as low as $10 before recovering, which matches calls by several others such as Standard Charted. A sustained drop to $10 per barrel would put several oil majors at risk never mind the smaller U.S. oil frackers that are already in the process of going bankrupt and could see half the industry disappear by the end of 2016 as most business models were based on oil prices of above $60.
My recent in-depth analysis concluded in a detailed trend forecast for the crude oil price as covered in this comprehensive 38minute video:
My forecast conclusions were for the oil price bear market to have made it's final bottom BY early February 2016 and embark on a bull market that would target a a trend towards a late year high of $60 as excerpted below :
Crude Oil Price 2016 Forecast Conclusion
My forecast conclusion is for the crude oil price to trade within three distinct trading ranges for 2016 of $20 to $40, $35 to $50 and $62 to $40. Furthermore the trend pattern imposed onto the trading ranges implies that a bottom is likely by early February 2016 at around $25, followed by a trend higher into Mid year towards $50, a correction into September, followed by a trend towards $62 before succumbing to a correction during December to target an end year price of approx $48 as illustrated by the following forecast graph.
The bottom line is that the current the oil price collapse is a wake up call to all major oil producers that crude oil as an energy source is running out of time. So whilst there may be future oil price spikes, however the long-term trend, given the likes of climate change is for the oil age to go the way of previous ages such as the Stone Age and Bronze age and so it will be for the oil age. Which means nations such as Saudi Arabia, regardless of price understand they need to get as much of their oil out of the ground as possible and sold off before they run out of customers!
Therefore current price action is inline with expectations of an oil price now trying to carve out a final bottom in the region of $25 to 27 for which it has about another 2 weeks to complete, so expect several retests of the low before the market enters into a sustained uptrend and remember not to expect a raging bull market any time soon, not with at least 500,000 b/d of Iranian oil about to start hit the market over the next few weeks.
See the original article for my view on oil stocks, i.e. whether now is a good time or not to invest. And ensure you are subscribed to my always free newsletter (only requirement is an email address) for future updates and the following forthcoming pieces of in-depth analysis
- Interest Rates 2016
- US Dollar Trend Forecast
- Stock Market Trend Forecast 2016
- US House Prices Forecast 2016 and Beyond
- Gold and Silver Price Forecast 2016
By Nadeem Walayat
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Nadeem Walayat has over 25 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 focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 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
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