Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Crude Oil Is Headed Much Lower By Early 2020

Published 07/10/2019, 12:32 PM
Updated 07/09/2023, 06:31 AM

Our Adaptive Dynamic Learning (ADL) predictive price modeling system is suggesting crude oil will likely continue to find resistance near $64 as a price ceiling and trend lower over the next 3 to 5 months – eventually breaking below the $40 price level near the end of 2019 or in early 2020.

Our research team believes this move could be contingent on a continued decline in global economic activity as well as our research suggesting that global currencies could be setting up for a breakdown event.

The USA and FED will do everything possible to keep the economy strong and hold markets up by talking about rate cuts, but eventually the music will stop and until then, we need to be long and strong stocks and keep a close eye on leading indicators like small caps, oil, transportation and industrial sectors for early warning signs.

We believe the breakdown in support for crude oil will coincide with a general perception of global economic weakness, foreign central-bank posturing and the possibility that foreign currency weakness may push global demand for oil much lower than current expectations.

The volatility increase suggested near the right side of this chart in late 2019 and early 2020 are indicative of oil prices reaching a critical support level while attempting to re-balance supply/demand-side economic factors against historic price lows. This will likely become a period where global oil traders feel the need to try to push oil prices higher while supply/demand factors settle to establish a basis price level for future price trends.

Monthly Crude Oil

In Conclusion

If our ADL predictive modeling is correct, we will see rotation between $47 and $64 over the next 3+ months before a breakdown in price hits in November 2019. This will be followed by two fairly narrow price range months (December 2019 and January 2020) where oil prices will tighten near $45 to $50. After that tightening, we believe an extremely volatile price move will happen in February through April 2020 that could see oil prices trade as low as $22 and as high as $51 over a two-to-three-month span.

As we've said, 2019 and 2020 are going to include incredible opportunities for skilled technical traders and investors. Think about how a move like this in oil and the global markets will effect precious-metals and the U.S. dollar?

I can tell you that huge moves are about to start unfolding not only in currencies, metals and stocks, but globally as well and some of these supercycles are going to last years

As a technical analyst and trader since 1997, I have been through a few bull-bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital.

Latest comments

And how does a weak dollar impact oil??? Another bullish factor!
My SWAG is oil price could go between $1 to $100 in next 12 Mo. How about that ?
Saudi’s need $85.....they will restrict supply until they get it. That coupled with Aramco IPO will drive prices. Trump needs China deal to get re-elected. All bullish for....wait for it.....OIL!
yet the saudi the lost control oil do is thing OPEC not in control anymore. us prod more oil and gas in the world
Why is writing these things as if he KNOWS ANYTHING...? Nobody knows anything. The ones who claim to know are the biggest charlatans
Anyone who claims to know what will happen next with certainty is most likely a charlatan. Trading is about managing the market's uncertainty.
Lol. Like EVERYONE who has predictions. You have no idea. Way too many variables you couldn't possibly account for. Just stop
I don't know about others but I get the feeling this guy couldn't convince himself with this dribble.. It would appear that the last down spike in crude prices in late 2018 has put a cap on shale oil production.  The EIA has been trying to mask this fact with their deceptive Weekly Oil Report, but the news that most shale oil companies are not generating cash flow signifies that they have likely hit a peak.  Also M & A with the majors stepping in will result in the so called efficiency experts taking over.  If this proves out over the summer then the $22/bbl this guy suggesting that his magic box is telling him will occur is a pile of horse manure.  Watch US production, thats the key.  If it doesn't rise above the 12.2 million b/d significantly then we are at the start of the next price wave.  Regardless the other scenario is even if the shale producers miraculously continue their build up the Russians and Saudi's seem bent on keeping their production capped.
Everything else in the market would be a negative against production gains.  (ie war in Mideast)  This is starting to look a lot like 1999 when the North Sea peaked, and the prices started to rise.  Only this time it will happen quicker since demand is at 100 vs 60 mmb/d and the decline rates for shale are much steeper than the North Sea.  Just my opinion.
sounds about right
FED easing will help restore the oil market further and while inventories are running down. Geo political issues remain as well.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.