Related Topics
Energy , Investing , Trading
     

Will Oil Prices Skyrocket in the Aftermath of Hurricane Ida?

“Supply and demand” does not always determine the price trend of crude oil

by Bob Stokes
Updated: September 01, 2021

As you probably know, Hurricane Ida hit Louisiana on August 29, the exact date that Hurricane Katrina made a Louisiana landfall sixteen years earlier.

On August 30, the Wall Street Journal said:

Oil Industry Surveys Damage After Hurricane Ida Slams Louisiana

The storm disrupted fuel supplies, and the speed of the recovery will depend on how long it takes for refineries to come online amid flooding and power outages

Did oil prices skyrocket due to the disruption in oil production? Well, Bloomberg reported (August 30) that prices initially fell 1.6% [as Ida made landfall] before they "edged" higher.

So, no, oil prices did not "skyrocket." As of this writing on August 31, crude oil's price is roughly in the same neighborhood as it was before Hurricane Ida hit.

This is mentioned because many energy market observers might think that a supply disruption would "cause" oil prices to zoom higher. However, contrary to conventional belief, the trend of oil prices is not always determined by "supply and demand."

Indeed, the oil production disruption associated with Hurricane Katrina was far worse than what occurred with Ida.

Even so, take a look at this classic chart from a past Elliott Wave Theorist, which said:

OilKatrina

The chart shows the day [Hurricane Katrina made landfall]: August 29, 2005, right at a top and just before a three-month oil-price slide of over 20%. A record-breaking... disruption in the supply of oil failed to make oil prices zoom. On the chart, it even looks as if somehow the event made prices fall.

That doesn't necessarily mean that the price of oil will take the exact same path following Hurricane Ida.

The point is: Financial markets like commodities are not always subject to the economic law of supply and demand, but instead are endogenously regulated and governed by the Wave Principle.

So, what happens with oil's price path now hinges on the current Elliott wave structure of oil's price chart.

Our monthly Global Market Perspective uses the Elliott wave model to forecast energy markets, including crude oil.

Get up to speed on our current analysis by following the link below.

Use Your Roadmap to Global Investment Opportunities

That "roadmap" is Elliott Wave International's monthly Global Market Perspective: the new issue will publish September 3.

Many of the 50-plus worldwide financial markets it covers stand at pivotal junctures -- in other words, the charts show price patterns that are likely on the verge of an abrupt and dramatic change.

Get ready to avoid risks and embrace opportunities for the remainder of 2021.

As you look through the Global Market Perspective's 50-plus pages, you'll find in-depth coverage of major financial assets in the U.S., Asian-Pacific, Europe and other geographic regions.

You get our forecasts for global stock markets and economies, currencies, bonds, metals, energy, cryptocurrencies and much more.

Follow the link below to review this global "roadmap" so you can prepare for what will likely take the majority by surprise.

Global Market Perspective

$59

Gives you clear and actionable analysis and forecasts for the world’s major financial markets.

Get insights for the U.S., European and Asian-Pacific main stock indexes, precious metals, forex pairs, cryptos (including Bitcoin), global interest rates, energy markets, cultural trends and more.

Energy ETFs: The Top Pick of Traders and... Robots Everywhere!

Oil prices are soaring and the world's biggest oil ETF, the USO, hit a 1-year high on October 20. Now, energy markets have won the hearts of traders and... robots alike! But before AI "bet big" on energy, Elliott wave analysis set the stage for USO's advance -- two months ago!

Commodity ETFs: The "Spice" of Life for Commodity Traders in 2021

After a four-month sideways trend, the Invesco Commodity Index ETF shot up in September on the way to its highest level since late 2014. See the chart and forecast that anticipated the big move.

EXCLUSIVE

MBB: Where Are "Mortgage-Backed Securities" Headed Next?

"Mortgage-backed securities" is a phrase that sends shivers down the spine of investors who remember the 2008 financial crisis. MBB is an ETF that tracks these securities -- watch our Interest Rates Pro Service editor walk you through MBB's 10-year wave pattern to see what's likely next.