Crude Oil Prices Weren't Supposed to Recover from the Pandemic. So Much for “Supposed To”!
Just when the world gave up on higher oil prices, our analysis said Look Up! And then this happened
by Nico Isaac
Updated: January 12, 2022
The last 18 months have been a time of unprecedented change for humanity as a whole. So many started 2020 off believing the road ahead would take us one way, only to have it verge suddenly into entirely unexpected directions.
For my closest relations, I've witnessed the unimaginable in spades:
One friend went into March 2020 without being able to run a city block, only to end 2021 having hiked 800 miles of the Appalachian Trail
Another friend tragically had to say goodbye to her dear uncle through a nurse's iPhone speaker placed next to him on his hospital bed
And another friend who had sworn off romance met a man on a dating app, and eloped with him in a rural southern courthouse 10 months later
So too has the world of finance been shaken to its core, with one market after another enduring shocking reversals and recoveries unforeseen by those in charge of blowing the trend-changing whistles.
Topping that list of is crude oil, which according to the mainstream experts, experienced the "unthinkable" in 2021; namely, a powerful uptrend. From the October 18, 2021, energynow.ca:
"The Unthinkable is Now a Reality as Oil Leaps through $85/Barrel.
"Brent crude surged as high as $85.10 a barrel on Friday, a price that would have seemed unthinkable just 18 months ago, when Covid halted global mobility and trashed demand."
In fact, between April 2021 and November 9, 2021, oil prices skyrocketed to their highest level in 7 years while also seeing their biggest annual gain since 2016:
Oil's recovery is "unthinkable" because to the majority of Wall Street experts, oil was doomed. Full stop. Its bearish fate was sealed back in April 2020 when a different kind of "unthinkable" event took place; the first global pandemic since 1918.
Here, an April 21 CBC News article rewinds the tape:
"The markets have been excessively volatile since the pandemic began, but on Monday the truly unthinkable happened -- oil prices turned negative.
"To make matters worse, if that's possible, the May WTI contract expires [Tuesday] and, like last month when the prompt month expired, we anticipate another price collapse. There is still too much oil coming out of the ground and not nearly enough places to put it or use it."
On April 14, 2020, the World Bank's website published this graphic, illustrating the destructive lightning strike of the pandemic through oil prices, with "oil demand returning to levels last seen in the 1990s."
And on April 16, 2020, an Asia Times' piece titled "Why Oil Prices Will Never Recover" hammered the final nail in crude's coffin:
"The oil price... will not rise above $30-40 a barrel for any sustained period again. Ever."
By every fundamental measure in the book, crude's recovery is unthinkable.
But, by every measure of Elliott wave analysis, crude's recovery is exactly what we were thinking would happen. Here, we return to the archives on May 1, 2020. On that day, our Energy Pro Service addressed the historic crash in oil prices and chaos among producers -- only to show this chart of the energy and anticipate that the market's next move of consequence would be...
From our Energy Pro Service, on May 1, 2020:
"The physical and financial worlds collided head-on Monday, April 20 when the May NYMEX Crude Oil contract registered a record low at minus-$40.32/Bbl...
"Today, global oil demand has plunged due to efforts to prevent the spread of the Coronavirus, and oil producers large and small have been slow to curb production, creating a run on excess storage capacity.
"While the longs were undoubtedly caught off-guard, the futures market did exactly what it's designed to do which is to facilitate price discovery – albeit in negative territory.
"The next phase, however, should be a time-consuming countertrend advance."
By October 2020, oil had reached the $30-$40 price area, as forecast. On October 5, our Energy Pro Service revisited its long-term wave count of crude and readjusted the labels to accommodate much higher prices; specifically, a rally that would "last for years and potentially retrace as much as 90%-105% of the" 2020 decline.
On December 1, 2020, Energy Pro Service showed this chart of crude oil, which called for prices to rise into the $80 area at minimum in the months ahead.
And, from there, oil continued to follow its Elliott wave script. Prices continued to rally, soaring above $85 on November 9 before easing.
Slowly, the veil of uncertainty surrounding the pandemic is starting to lift. And with it, we're beginning to reclaim some sense of knowing about where our futures are headed.
For traders and investors, the first clear step in that direction is our Energy Pro Service.
Relying on oil’s “fundamentals” is a slippery slope
If the last 18 months has taught us anything, it's that life can be totally unpredictable.
But energy markets don't have to be. Daily, even intraday, our Energy Pro Service presents clearly labeled price charts, in-depth analysis, and live video updates which walk traders -- new and seasoned -- through high-confidence setups in crude oil, natural gas, heating oil, major energy ETFs and more.
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