OIL OUTLOOK

September 14, 20236 Comments

I’ve had some questions regarding the outlook for oil lately. Today I will look at the longer termed then nearer termed potential of oil prices. First, lets look at some historic patterns of oil when supplies became constricted, as we are seeing today. Then, we’ll look at the neartermed picture from more of a technical analysis perspective. Is now the time to buy oil?

1970s Deja vu

Bloomberg notes:  “Global oil markets are looking at a supply deficit of close to 3.5m bpd in Q4, the biggest shortfall since at least 2007.”

My comments:  In the 1970’s, then in 2004-8, oil surged due to shortfalls:

 

 

Stocks – outside of the energy producers- went sideways and massively underperformed in those two periods.

You can’t trust the media, or Sell-side research. Yet another example

Before: “Bank of America slashes its oil-price outlook 9% for 2023 as debt ceiling crisis increases the risk of recession.” — May 2023

After: “Oil Could Breach $100 Before 2024 on Strong Asian Demand, OPEC+ Cuts”, Bank of America this week. “The return of Asian energy demand led by heavy Chinese transportation-sector consumption as well as ongoing production cuts by OPEC and its allies could lift crude futures above $100/bbl before 2024,…”

 

Near termed view

WTIC recently broke its resistance at $80. There is a fair bit of resistance at $90 that may inspire a pause (currently $88).

  • Near termed indicators suggest its a bit overbought, adding to the resistance at $90.
  • Longer termed indicators are looking very bullish – see MACD, comparative relative strength vs the SPX, and cumulative moneyflow.

Watch for a possible pullback as we get to $90. It may hit $90 or close to it, pull back and fix the overbought momentum. From there, it may then redouble its bullish efforts and break through that $90 lid. A neartermed pullback may represent a new buy point to add to positions.

Here’s the chart:

6 Comments

  • Hey Keith I really like your general commentary on commodities. Commodities is a big driver for the TSX so your focus on this helps us focus on the assets we wish to invest in.
    Also I really appreciate and like your recent increase of adding commentary on charts to focus our attention to the point you are making about the chart. Keep that approach up.

    Reply
    • Thanks – I’ve been subscribing to a better capture software which allows me to do these types of graphics–and yes, when I can I will try to put those notes on the chart–makes it easier to understand my observations.

      Reply
  • Thanks Keith …..
    You did not mention the seasonality of oil which seems to end early in October … Does this coincide with your resistance comments above and your longer term outlook?

    Reply
  • terrific, & timely video on “Oil Outlook”. I have far more oil investments than clean energy. Dipped my toe in two (NPI & NEE). Sold NPI & took a small loss. Got in & out of uranium through Sprott U.un many times. Sadly, sold it most recently too early & it has broke out bigtime, stronger than oil. What is your analysis on U.un? Not sure if you think Cameco is a better way to go. Overall, I am a strong proponent of developing all forms of energy eg. fossil, wind, solar, nuclear, etc. All of it.

    Reply
    • Gary–you are speaking my exact sentiments re development of energy. World population is growing. We need more energy, not just one source. Its the only sensible thing to do.
      Anyhow–we own a uranium stock. Yes, its parabolic. I FULLY expect a pullback, but the world demand for the commodity is still strong, so I expect a pullback to be short. I think there was a question on uranium in the Ask me questions, which we will be recording soon.

      Reply

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