In just two short trading days (January 21 and 22) oil prices have gone from boiling to toiling. Crude fell more than 4% to land at its lowest level in one month.
According to the mainstream experts, one main factor is to blame for turning the blue skies in oil gray: A doubly-bearish January 21 Energy Information Administration (EIA, for short) report revealing these two details:
"Refining activity is operating at more than 20% below capacity, a 30-year low -- AND -- Oil demand in the month ending January 15 was 1.8% lower than a year earlier."
On this, the following January 22 news items capture the fundamental du jour in action:
"Oil Futures Extend Losses On Fear Of Weak Demand" (MarketWatch)-- "Oil Below $78 As Demand Outlook Trimmed" (Daily Times) -- "Oil Prices Tumble On Demand Concerns" (Sydney Morning Herald)
There's just one problem with this logic; namely: The downward slide of oil prices was greased long BEFORE the January 21 EIA report went viral. To be exact, crude oil began its most recent descent on January 8 and has been falling ever since.
As for seeing the reversal in oil prices before it occurred -- EWI's Energy Specialty Service editor Steve Craig has the distinct honor. Steve first identified the downside potential in crude in his January 8 Energy Complex Weekly Wrap video. There, Steve presented the following close-up of February Crude Oil alongside the following narrative:
"At this point, I think we're getting some clarity as to which the better view is. I'm certainly viewing this as an A-B-C advance... I'm anticipating further gains. Once we make that move," a decline should ensue.
Soon after, and "further gains" later, Steve issued this alert in this January 11 Energy Specialty Service forecast:
"Today's break below Friday's low leads me to believe that today's high marks the end of the advance. I'm now looking for impulsive downside price action to support the idea that a decline is underway."