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A Slippery Slope for Oil: How Hard Will Prices Fall?
Elliott wave analysis helps you see around the corner
By Bob Stokes
Fri, 01 Jun 2012 18:00:00 ET
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Remember when oil prices peaked in July 2008 at $148 a barrel?
 
News reports were full of comments that said black gold had a lot more upside. That didn't surprise us: investors have always extrapolated the current trend into the future.
 
Of course, just as "peak oil" voices were the loudest, the market turned. By December 2008, a barrel of oil cost just $32. It was a near-vertical drop for six months.
 
Oil bulls suffered, though motorists saved money: oil and gas prices do trend together.
 
 
 
After hitting a low, oil prices rebounded. Gas prices soared to over $4 a gallon in some parts of the country.
 
Soon enough, the "voices of extrapolation" grew loud again:
 
Energy experts say gas could hit $8 if Iran closes strait
(USA Today) March 23, 2012
 
T. Boone Pickens: Oil Could Hit $148 Per Barrel
(CNBC.com) April 3, 2012
 
Those are just two examples.
 
In stark contrast, the April Elliott Wave Theorist said
 
The rush to extrapolate is all we need to conclude that the odds of oil and gasoline prices going to the moon are extremely low. Yet we also have Elliott wave analysis.
 
And that analysis strongly suggested that oil was headed down. Sure enough, oil reached a new low today (June 1) and has closed lower for 21 out of the past 22 sessions. In May, the commodity lost 17.5 percent and was down 8 percent this week alone. Gas is down 50 cents a gallon in less than 2 months. That's about a 15 percent tumble.
 
Where do we see oil prices headed from here?
 
Take a look at our Financial Forecast Service which includes instant access to the April as well as the new double-issue May Elliott Wave Theorist. In addition, the latest Financial Forecast was just published today (June 1). You'll also gain insights into the near-term trend with the 3-days a week Short Term Update

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You get:
 
1) Prechter's new, 21-page Elliott Wave Theorist

2) Near-term outlook via our Short Term Update

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Tags: crude oil, Elliott wave, Robert Prechter
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