Oil’s 6-Month-Long Drop: Is It Over?
Crude has been in the headlines almost daily for the past six months, but for all the wrong reasons.
A bit of history: After hitting a high of 107.73 in late June, oil has dropped an alarming 40%. (Well, alarming to some. If you own a car and live in the U.S., you’ve seen an almost corresponding drop at the pump.)
On Tuesday, Dec. 9, after a hitting a 5-year low, crude was able to close higher for the first time in five consecutive days.
Does that mean that oil has finally found a near-term bottom?
For some answers, let’s turn to EWI’s Chief Energy Analyst, Steve Craig. He has been preparing his Energy Pro Service subscribers for oil’s near-term ups and downs. In his final intraday update for Tuesday, Steve wrote (partial Elliott wave labels shown; bold added):
I still can’t rule out further near-term strength, but the relatively deep retreat makes it seem a little less likely. In any event, the rebound should prove corrective and lead to another leg down (minimally below the 62.25 overnight low) to finish the … decline.
Repeating: Looking ahead, a potential downside objective … is 60.82.
Crude fell to $60.44 on Wednesday — and continued to drop Thursday, Dec. 11.
Today, crude prices are at a 5-year low, and at least one economist thinks “$60 oil will be the norm for the next 5 years.” (CNBC)
Our Energy Specialty Service doesn’t look quite as far down the road. Steve’s latest update says:
“…Crude is oversold by most any measure and primed for a relief rally, but there’s nothing yet to suggest that the decline has ended. Ideally, the market will move [to]…”
So at least in the short term, a bounce is due.