by Alexandra Lienhard
Updated: June 14, 2017
Watch this new interview with Steve Craig, the editor of EWI's Energy Pro Service, to get his latest take on what he expects for the products, crude and natural gas in the months ahead.
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[Editor's note: The text version of the video is below.]
Alexandra Lienhard: Joining me today by phone to offer some perspective on the energy markets is Steve Craig, Elliott Wave International's Chief Energy Analyst and editor of EWI's Energy Pro Service. Hi, Steve. Thanks for talking today.
Steve Craig: Hi, Alex.
AL: Now the products are involved in heating oil specifically are very close to important lows and support areas. Steve, is there an end in sight? Or is the trajectory as it's been for the last two months still lower?
SC: Well heat and unleaded are both very close to their 2017 lows. Now, the larger trend is down. And I expect more of the same for the products as well as for crude in the months ahead.
AL: And now, do the products lead the crude markets? Or does crude tend to lead the products?
SC: It's not unusual to see the products take turns at leading. But they aren't going anywhere for long independently of oil. So the bottom line is that crude is the major driver within the petroleum complex.
AL: Now, speaking of oil. Aside from the summer driving season, a major story is always OPEC. And there's a recent quote that the rebalancing of the oil market will be happening at a slower rate. And now Steve, when looking at the markets, do either of these stories or issues matter much to you?
SC: Not one iota. Last summer, Bob Prechter devoted back to back issues of the Elliott Wave Theorist to debunking the notion that you can accurately forecast the price of oil based on supply and demand factors. Now supply and demand is driven by price, and it lags rather badly. In fact, Bob showed that our analysis, based on the rules and guidelines of the Wave Principle, alerted subscribers to oil’s major turning points since we began covering it full time in the 1990s. Now, that's not to say that we caught every twist and turn. But I want to remind listeners that no form of analysis, technical or fundamental, is 100% accurate. Trading involves risk. And the key to successful trading is managing that risk.
AL: So, bring it back to the energy market. Natural gas looks like it's been slowly rolling over the last few months. What's your view medium term?
SC: I'm just not convinced that the counter-trend advance from the 2016 low has run its course. I suspect that we'll see higher prices before the next substantial decline.
AL: And XLE continues to be strong under performer versus the other major equity sectors. In your opinion is XLE an accurate reflection of the energy markets?
SC: The XLE is heavily weighted towards companies that derive their revenue either directly or indirectly from oil and natural gas. And it has a tendency to trend in tandem with oil. So, where oil goes, the XLE is likely to follow.
AL: Well, Steve, certainly a lot to keep our eye on. Thanks for talking today. I appreciate your time.
SC: Sure, Alex. Any time.