Lately, there is one question I get asked by readers more than any other.
And no, it’s not about gold, although I covered that two weeks ago.
It’s about my forecast for oil, specifically: “When will oil enter a new bull market?”
First, a little history lesson.
Crude oil bottomed in early 2016, in the $20-a-barrel range, after suffering a horrific bear market.
The bear market decline took oil prices down from a peak over $100-a-barrel in 2013 … a plunge of more than 76% in value!
Over the past year-and-a-half, oil has bounced around in a range of $40- to $50-a-barrel. And if we haven’t taken out the 2016 low by now, it’s increasingly likely we won’t revisit those lows, much less break them.
Crude is up nearly 15% since June. But it’s still far below its December peak above $58-a-barrel. That’s the way markets work. They can be plain frustrating much of the time, with plenty of false starts — just like we’ve seen in gold since 2012.
Remember, oil is one of the most-volatile markets on Earth. You can see plenty of sharp moves that make you question a trend. And you may not even realize when it’s entered a new bull market.
Oil is in a fresh uptrend now. But it’s not out of the woods just yet. Black gold has critical resistance to overcome from $52- to $55-a-barrel to confirm a new bull market in crude.
According to our proprietary E-Wave forecasting model, we expect a cycle low in crude around the end of August, followed by a rally to new highs in September and early October.
But then you’ll notice another decline from early October into November. Again, more of that frustrating volatility.
Here’s the good news. A powerful rally phase should kick in early in 2018. One that takes oil prices substantially higher.
When that takes place, you’ll see oil break right through resistance at $55-a-barrel, and quickly challenge $60.
And you can expect a similar powerful uptrend for energy-sector stocks as well.
Again, choppy over the next few months, both up and down. But that pullback will be an excellent buying opportunity to position for the next leg higher in crude oil.
But in the meantime, the real buying opportunity in energy markets right now is natural gas, and here’s why …
As you can see above, our E-Wave model expects a substantial upside move in natural gas prices over the next two months. And this cycle forecast is backed up by two bullish fundamental forces at work right now:
First, weather forecasters expect a more severe Atlantic hurricane season, which means greater chances for a natural gas supply disruption in the Gulf of Mexico, driving prices higher, and …
Second, hotter than normal late summer temperatures across the U.S. are boosting natural gas demand for power-generation to run all those air conditioners.
Bottom line: A substantial profit opportunity for investors in natural gas is right in front of us. Plus, a longer-term buying opportunity in oil and energy stocks is just around the corner.
Good investing,
Mike Burnick
P.S. Energy markets move fast and you need fast, actionable trading ideas to profit from it. To find out how my Real Wealth Report members are positioned for the windfall in black gold, click here now.
James August 30, 2017
What I would like to know is how’s this gonna effect the markets for leveraged exchange traded funds, unleveraged exchange traded funds, mining stock, futures and options. Are we gonna see a rise in call options or put options? Are we in for a bull market in the precious metals markets? Maybe even a gold rush.
janet899 August 28, 2017
Where can we find archived charts?
Deborah August 26, 2017
general comments regarding trends is nice. A few stick tickers would be better to see just which direction to go. Sell the info if you want but if people trust the author they will always pay a nominal fee
Jim August 24, 2017
Hi Mike,
I’m having a bit of confusion trying to get my head around the following concerning “GOLD”.
1.) You showed with charts that Gold/Silver would be going down, then up and then down farther
by the end of the year 2017.
2.) Elliott Wave personnel state that gold should go up due to the three tops and then start it’s
long decline.
3.) Harry Dent is stating basically the same as Elliott Wave.
4.) Jim Richards is stating that Trump will, by December 31, 2017, “REBOOT” the US $ and send
gold to $10,000.00/oz.
You see as I can only trader with Canadian $$$, I’m limited to use Horizon HGU, HGD, HZU and HZD
on the TSX.
“ANY REAL ANSWERS” ?????????????????????
Jim
malcolml. mac kay August 23, 2017
What are the vertical scales on your graphs? Horizontal scale is date but what is the verticle?? We are not mind readers
WayneS August 23, 2017
I worry a bit when I receive your Ewave forecasts that appear not to adjust for new discoveries. I think Larry would have changed his algorithm model based on new information. Energy independence has arrived in the U.S. Fracking old abandon wells in the Permian Basin and new discoveries because of this technology has now revealed we have far more oil here in the U.S. than previously estimated, a 500+ year supply at our present annual consumption rate.
Supply and Demand Law still rules. We aren’t likely to see oil prices skyrocket again except in the case of war or hyperinflation.
D. A. Grgurich August 21, 2017
You can talk all you want to about oil “cycles” and modeling them. The fact is that the basic oil price is still driven by the actual or perceived supply and demand balance — not by consumer or investor sentiment. At the moment, the marginal oil producers in the world are located in the shale regions of the USA. A shale well, unlike previous offshore wells (for example) only takes a few months to drill and produce, the drilling is almost 100% successful, and the wells, although smaller, can produce only a few months after the drilling. So they can be ramped up very cheaply to demand, are cheap to shut down, and produce up to 4-5 years quicker than traditional offshore wells. Each well produces less and doesn’t last as long, but who cares? They are quick, cheap and easy to bring online and there are shale oil deposits all over the place. And the technology of fracking is advancing so quickly that costs are lower and lower, and the areas rich in shale oil and gas are all over the US.
Now that the “oil rush” is over, the speculators who leveraged their investments enormously are or have gone broke and knowledgeable oil men own the shale fields (the speculators leveraging their investments had to sell cheap), the factors above will govern what is produced. It means that the economics of shale oil production can dictate the marginal price of oil on the market, effectively putting a ceiling on the worldwide price level.
Our stupid US government can hamper this, of course. Instead of opening up federal lands to shale oil production and encouraging pipeline construction they can delay it. But if common sense prevails, OPEC will be dead and energy prices — so critical to the US transportation industry and economy — can be capped.
I doubt that anybody can model the above situation since few know the technology which lies behind it. I spent 25 years in the oil industry and it is as clear as a pike staff to me. Of course, that means that I take your oil price forecasts with a grain of salt. Sorry.
Marina H. August 21, 2017
Mike,
Which ETF’s covering natural gas do you recommend to buy now? 2X and 3X as well. Many thanks.
Antonio August 21, 2017
Sometimes I like to print your articles and read them on my way home in the bus/train. If it’s not too much trouble, can you make your articles printer friendly? Thank you.
michael ehrenpreis August 21, 2017
goon natural gas stock please
hooscfp August 21, 2017
Mike,
It would be very nice if you’d include a Position Tracker on your specific recommendations. For example. where are you on the HD option recommendation?