Chart shows Crude to hit $60

[Top Oil Trader + 469]

There are good opinions for why Crude will hit $85, the current prevailing view among analysts, traders and talking heads. And we have people like me who say Crude will hit $60.

First though, a disclaimer, trading futures is risky, you could lose all your money or more trading futures.

Now I use chart analysis that would be foreign to most traders, including CFAs, so I have tried to simplify the chart as much as possible. And to keep the time frame simple, i'm not showing the Weekly, or intermediate Time frames, though I do use those. But I will keep it just to the Daily time frame. You will see lost of studies, can't go into them now, but one study you will recognize is the green line which is the 200 Moving average, a MA used by large institutions.

 

 

Notice when prices broke the LT (lower trend line WTI hit $63. But on the recent up move it was not able to break the UT (upper trend line). As a matter of fact the UT kept it at bay.

Which now makes the LTT (lower trend line target) as the target, and that comes in at $60, which would mean the prices would touch the 200 ma. There is a lot more to this chart than explained, and I removed lots of studies from the above, to simplify it so that even a lay observer could follow along. I hope this helps.

[Jan van Eck + 7,558]

Personally, I suspect (with no empirical evidence, just my thinking) that crude will continue to decline.  And the reason is that the biggest user, the USA, is continually, and incrementally, getting better and better at stretching the fuel economy out for its auto and truck fleet. You will seethe impact of new engineering as everything from the Volvo flywheel transmission to the hybrid transmissions of a large number of other automakers start to hit.  Hybrids are particularly good in urbandriving, and as the population continues to shift to urban centers, that will have a disproportionate impact. The other subtle development is that rural populations are rapidly becoming much older, and old folks tend to drive much less. For one thing, they don't drive to work because they are either working from home or they are retired.  So the long distances in rural America are not being driven to the intensity that they were a few decades ago.  And that again drops down the demand. 

What pushed up demand is net immigration.  But here again, the latest immigrants, the ones that drive, head for urban areas - and tend not to drive much if at all. So you are just not seeing the push from consumers as you would have in say 1977.

Additionally, the truck industry is changing.  The industry is chronically short of drivers and the larger number of drivers today are older.  The average age of an interstate bus driver including charter drivers is 62.  Those guys will retire soon enough.  So truck trailers will more and more be put on railroad flatcars and hauled by locomotives - using far less fuel.  The incentive for doing so is, perversely, that a mile-long train needs only two men, but can haul 300 truck trailers across the country, on maximum 1% grades. 

And at some point somebody is going to start getting serious about converting US coal to gasoline.  When the above factors all hit, crude oil drops to ten bucks. The world is awash in oil. 

Edited July 8, 2018 by Jan van Eck

[GESPER + 1]

ON the structural side the evolution goal is to get some type of autonomy on the energy side, on the market side the political mess and the financial risk leads to economical shocks. So the 60; $/bbl goal is possible but when and how long this level is sustainable?

In 2008 I posed a study predicting 60$/bbl for 2015 on structural adaptation and re balancing of financial structure. The problem now is more complex as the main issue is the leadership in the world economy, with the main uncertainties in financial fields and dollars leadership in valuation of international trade.

The figure will be reached but when and for how long