Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Crude Oil Price Trend Forecast 2016 Update

Commodities / Crude Oil Sep 14, 2016 - 01:47 PM GMT

By: Nadeem_Walayat

Commodities

At the start of the year the prevailing mood in the oil market was not just one of doom and gloom but of catastrophe as the oil price sunk below $30, skidding by the middle of February to virtually touch $25, a period during which many prominent analysts and investment banks such as Goldman Sachs all of whom were bearish on the prospects for oil price this year even suggesting that the oil price could sink to as low as $10 (Standard Chartered) which meant that the oil producers, the frackers and even a string of nations such as Russia, Nigeria and Venezuela were on the fast track towards going bust in as their oil profits that financed state spending budget deficits evaporated.


We'll now 7 months on and the oil market has gradually transformed itself from that of an imminent $10 apocalypse to one of hopeful recovery as the oil price has clawed it's way back relentlessly through a series of critical levels of first $30, $35, $40, and popping above $50 to a high of near $52 for the year! More than DOUBLING from its 2016 low! At which point all those who failed to see the rally coming began forecasting higher prices i.e. one of the biggest oil bears of the year, Goldman Sachs reckoned that the oil supply glut has evaporated and oil prices are going to reach $51, at about the time when crude oil was virtually hitting their supposed forecast.

These are the SAME who have been banging the drums all year for sub $20 oil price, but then AFTER the oil price DOUBLED were proclaiming themselves as being bullish! This illustrates an important point! Goldman Sachs and the REST are nothing more than salesmen! They clearly don't rely on their forecasts when trading as you or I understand trading to be, for if they did they would be back to being just as bankrupt as they were during the financial crisis.

Crude Oil Price Trend Forecast 2016

In terms of my oil price forecast for 2016, my in-depth analysis of Mid January forecast expectations for the crude oil price to bottom by early February at approx $25, the actual bottom came in at $26 and within the time window for a final bear market bottom as the following video analysis and article excerpt illustrate:

17 Jan 2016 - Crude Oil Price Crash Triggering Global Instability, Trend Forecast 2016

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.

Crude Oil Price Forecast 2016 - Current State

The crude oil price rallied from the mid February low of $26, trending higher all the towards setting a high for 2016 at $52 early June before succumbing to its most recent correction to $39. This is set against my crude oil price trend forecast of Mid January 2016 that forecast crude oil prices by Mid September should be at about $45 after correcting to an August low of $39.

Whilst my last oil update of Mid May 2016 confirmed expectations for the oil price to correct during the Summer from the the then high price of $48 which subsequently come to pass. Therefore crude oil continues to show little deviation from the forecast trend which is now into its 9th month. Which thus implies that the oil price rally should soon resume by targeting a trend to a high of $60 during November before correcting during December.

Stock Market - Crude Oiil Forecast

https://youtu.be/Zlax5GaiB40

And just as I stated in Mid May the oil price correction has definitely once more brought out the doom merchants who for instance proclaim that the oil price rally as being nothing more than a short covering rally.

Crude Oil Analysis

Fundamentals - The major oil producers have failed to agree an output cut or freeze which is oil price negative. Whilst the oil industry continues to cut back on exploration which is long-term positive for oil prices. The IEA reported that the oil glut is expected to continue well into 2017 as well as downgraded demand growth. So on balance theres not been as much supply destruction as there should have been which implies a weaker oil price trend.

Trend Analysis - The oil price is in a narrowing range pending a breakout. A downside break would be below $42 and to the upside about $48, as the over-riding trend is up then the breakout should be to the upside. A resolution should be within the next week or so. With confirmation on break above $49.50. Whilst to the downside next support would be at $39.

MACD - Is fairly neutral which implies the resulting trend could persist for several months.

Elliott Wave - The simplest pattern resolves to the $39 low being a Wave 4 low which implies we should now be in the early stages of an impulse Wave 5 that will be somewhere between Wave 3 and Wave 5 in expectations or $14 to $18 which would extend to about $53-$57.

Seasonal Analysis - OIl prices tend to rise during September then fall into December followed by a late December rally. So the opposite of my trend forecast.

US Dollar

Overall the oil price continues to exhibit in an inverse relationship to the US Dollar which means not to expect any significant spike in the oil price anytime soon. The USD continues to trade within a relatively tight range of $94 to $100. However immediate trend is upwards which implies immediate oil price weakness. Therefore clearly for the oil price trend to resume then USD needs to fail to break higher beyond immediate resistance at $96, else it's going to be tough to get the oil price rally going.

Conclusion

The overall picture being painted is one of future oil price weakness relative to my trend forecast. With the potential for the oil price to break lower and waste time around $40 before rallying. So whilst there has been no significant deviation to date, going forward the oil price will likely find it tougher going over the next couple of months than I originally concluded it would back in January.

Therefore I expect the oil price to now target a slightly lower high for 2016 of $55 against my January forecast high of $60.

My next in-depth analysis will seek to map out a trend forecast for the stock market for the remainder of 2016, so ensure you are subscribed to my always free newsletter to get this in your email in box.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2016 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

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.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

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

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.


Post Comment

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