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.

Comments

2 Responses to “Oil’s 6-Month-Long Drop: Is It Over?”

  1. chris hines on December 30th, 2014 6:14 pm

    i think that they kept oil low thru the holidays to fuel the retail buying for the holidays. keep oil low people can buy other things to to help the ecomity. but now the holidays are over, time for oil to start climbing. i think its going to rise

  2. Bomx55 on August 13th, 2015 5:41 am

    I believe with economy, Oil prices will stay steady low for awhile, when economy climbs up, so will Oil prices, People are spending less time on the roads, vacations, etc. because they can’t afford it. I firmly believe Unemployment Rates looks better because less People are trying. Our economy has sank to an all time low and anyone not seeing this is in denial. We won’t have a “depression like the 1930’s because we aren’t in the 1930’s, this will be different (is different). This will really SHOW in Oil prices that you won’t see in Unemployment.

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