Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Will Crude Oil Prices Skyrocket in the Aftermath of Hurricane Ida?

Commodities / Crude Oil Sep 03, 2021 - 07:24 AM GMT

By: EWI

Commodities

"Supply and demand" does not always determine the price trend of crude oil

As you probably know, Hurricane Ida hit Louisiana on August 29, the exact date that Hurricane Katrina made a Louisiana landfall sixteen years earlier.

On August 30, the Wall Street Journal said:

Oil Industry Surveys Damage After Hurricane Ida Slams Louisiana
The storm disrupted fuel supplies, and the speed of the recovery will depend on how long it takes for refineries to come online amid flooding and power outages

Did oil prices skyrocket due to the disruption in oil production? Well, Bloomberg reported (August 30) that prices initially fell 1.6% [as Ida made landfall] before they "edged" higher.


So, no, oil prices did not "skyrocket." As of this writing on August 31, crude oil's price is roughly in the same neighborhood as it was before Hurricane Ida hit.

This is mentioned because many energy market observers might think that a supply disruption would "cause" oil prices to zoom higher. However, contrary to conventional belief, the trend of oil prices is not always determined by "supply and demand."

Indeed, the oil production disruption associated with Hurricane Katrina was far worse than what occurred with Ida.

Even so, take a look at this classic chart from a past Elliott Wave Theorist, a monthly publication which analyzes financial markets and social trends. The associated commentary is below the chart:

The chart shows the day [Hurricane Katrina made landfall]: August 29, 2005, right at a top and just before a three-month oil-price slide of over 20%. A record-breaking ... disruption in the supply of oil failed to make oil prices zoom. On the chart, it even looks as if somehow the event made prices fall.

That doesn't necessarily mean that the price of oil will take the exact same path following Hurricane Ida.

The point is: Financial markets like commodities are not always subject to the economic law of supply and demand, but instead are endogenously regulated and governed by the Wave Principle.

So, what happens with oil's price path now hinges on the current Elliott wave structure of oil's price chart.

If you'd like to learn about how the Elliott wave model can help you analyze financial markets, you are encouraged to read the Wall Street classic Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter.

Here's a quote from the book:

Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market's position within the behavioral continuum and therefore about its probable ensuing path. The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

The Wave Principle can be used to analyze any widely traded financial market, like crude oil, stocks, gold, bonds, currencies and more.

Here's the good news: You can read the online version of Elliott Wave Principle: Key to Market Behavior for free once you become a Club EWI member.

Club EWI is the world's largest Elliott wave educational community and is free to join. You are under no obligations as a Club EWI member. At the same time, you'll enjoy access to a wealth of Elliott wave resources on investing and trading.

Get started by following this link: Elliott Wave Principle: Key to Market Behavior -- free and unlimited access.

This article was syndicated by Elliott Wave International and was originally published under the headline Will Oil Prices Skyrocket in the Aftermath of Hurricane Ida?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2022 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