Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

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

© 2005-2016 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

Catching a Falling Financial Knife