The what: On February 16, oil prices plummeted more than 8% to below $35 per barrel, a new low for the year.
The why: According to Main Street, the global economic meltdown is taking the wind out of the worldwide energy demand. In the words of one February 16 Bloomberg article: "We won't see the market trend higher until there is a firm belief on the part of investors that the economy is turning around. All the economic doom and gloom is weighing on the market."
So, today the usual experts count crude oil as one of the many victims of the widespread credit crisis. But that wasn't always the case. Back in mid-2008, in fact, those same pundits predicted that a global economic slump would pump UP the price of oil in an unprecedented "Super Spike."
On this, the following news items from the time say plenty:
- “Oil continues to gain momentum amid worries about the global economy… It is a reflection of a commodity that will still have value if the rest of the financial world comes crumbling down around us.” (Couriermail.com.au)
- “Investors bet on $300 oil.” (Financial Times)
- “Support for crude came… on speculation US mortgage losses will deepen, increasing the demand for commodities as a hedge against inflation. It would be a brave analyst to call the end of the upward momentum in prices.” (Bloomberg)
Yet -- on July 11, 2008, crude oil prices fell over a cliff, plunging nearly 80% in a six-month sell-off to five-year lows.
(
The Prospects For Oil. Find out the real story behind why oil prices are falling, and how investors' actions now are lining up to fit our long-time Elliott Wave scenario. The latest
Elliott Wave Theorist has the scoop. Click
here to begin.)
As for seeing the end to oil's uptrend BEFORE it occurred, our expert team of analysts have remained one step ahead. Here, the following insights from our archived publications say plenty:
In the months leading up to the final $50 run-up in crude oil, the October 2007 Elliott Wave Theoristpresented the following close-up of the energy and wrote:
"Today, oil is near the end of wave 5 (of (5)). Fifth waves in commodities are not easy to identify. Some times they are blowoffs, in which prices move upward vertically and then just fall as fast as they went up… The price of oil and the inflation that propelled it are reaching a historic peak."
When the wheels of change began to turn in earnest, the June 9, 2008 Elliott Wave Theorist set the stage for energy's coming slide and wrote: "I am publishing this issue a bit early in order to alert you to an opportunity developing in the oil market. One of the greatest commodity tops of all time is due very soon.”
Exactly ONE day before the market's reversal, the July 10 publication of Elliott Wave International's Energy Specialty Service went on high alert with this warning:
“Two key topping indicators are still evident – extreme bullish sentiment and relentless media attention. Possible third and fourth signs – volatility and cries for more government regulation of commodity trading – are nearing their heads… It all points to a very mature uptrend.”
Choose the financial service that suits your investment needs best: Long-term insight of crude oil right from the desk of Bob Prechter in the January 22
Elliott Wave Theorist. Act now.