By Cory
Crude Oil In a New Bear Market?
This post comes from our friend Chris Vermeulen, The Gold And Oil Guy. We typically chat about either gold or oil on our calls and since Chris is not around today I figured I should post his thoughts for everyone.
Chris is mostly looking at the technical outlook for oil but he does mention that companies are adjusting for a lower oil price in their forward guidance. This is part of a bigger story that includes the Chinese slowdown, rising US rig counts (that are now at record levels), and huge question marks around the middle east. Both the supply and demand side of the story for oil is weak. That being said there is the possibly that too many investors are down on oil that it may be due for a bounce. It should only be that though, a short term bounce.
Click here to visit Chris’s site.
The newest bear market is in crude oil. The definition of a bear market is when an ‘asset class’ is down more than 20% from its recent high: (Bear Market Rally Definition Investopedia). It has been more than five years since the market fell so hard so fast from its’ high. Two months later, it was even lower. During the past 20 years, the SPX has struggled when oil fell into a bear market!
Oil prices broke to a fresh seven-month low on June 21st, 2017, with WTI Crude Oil dropping to $42 per barrel. The renewed and heightened pessimism over the pace of rebalancing has sunk in as O.P.E.C., is struggling to reduce its’ inventory. U.S. shale continues to grow production. There are large volumes of supply back in the market at the worst possible time!
WTI Crude Oil Now Technically Bearish
Most oil companies are now adjusting to “lower for longer.”
The Wall Street Journal reports that “most in the oil industry are resigned to low prices for years to come, recognizing that a range of $50 to $60 might be a semi-permanent equilibrium.”
Between 2014 and 2015, 105 oil producers and 120 oilfield service companies went through bankruptcy.
Conclusion:
In short, these extreme price movements and key support levels can provide some fantastic opportunities to trade oil like my last trade in SCO for a 21% move a couple weeks ago. If you want to get involved in the next oil ETF trade subscribe here: www.TheGoldAndOilGuy.com
Chris Vermeulen
Source:: The Korelin Economics Report
The post Chris Vermeulen – The Gold and Oil Guy – Tue 27 Jun, 2017 appeared first on Junior Mining Analyst.