Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

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

6 Critical Money Making Rules