Today we would like to share my opinion on the possible price of Brent Crude Oil in the coming years, analyzing the chart on a monthly timeframe The war in Ukraine is not just a war between the two countries, it is a geopolitical problem that will affect all world economies. The world's economies have not yet recovered from the Covid-19, and here is another blow.
Expensive energy will stop buying due to the excessive cost of production of "everything", the purchasing power of the population falls. Declining demand for oil will bring down the price. The fall in the price of Brent oil -25% in the coming months in the area of $78-80 per barrel will be just the beginning. But looking at the schedule, is striking the price zone of $36-46 to be a strong mirror level and this is -65% of the current price Maybe this is a fair price for oil, from where a total restart of the world economy can take place by purchasing cheap energy resources.
Perhaps this is symbolic, but for the first time on the historical price chart of Brent, the zone of $36-46 was established as important when there were powerful geopolitical world changes: 1979-1980 - the Islamic Revolution and 1990-1991 - the collapse of the USSR
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Comment
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The first target of $78-80 has been achieved. A small rebound upwards is now possible.
But globally, there is a very large space where price can fall. Hopefully TP 2 will be reached, patience)
Do you think that the return to 36-46$ is realistic? Consider that the trend of commodities looks like it's about to reverse a 20 year downtrend. Actually, some already think it HAS reversed and peaked, but what about gold and others? Commodities all still seem very cheap to me. Also consider that the money supply has grown ~1300% since 1980.
I've noticed lately that there seems to be a general consensus in the population that "oil is expensive" and therefore "it must be cheaper soon". Just like inflation. A lot of people are taking this spike in oil as a short-term reversal and NOT as a change of overall trend. I think this is a huge mistake. People are taking the optimistic route of thinking because of uncertainty. But being optimistic during uncertainly doesn't seem logical to me. I'm a contrarian so naturally I think the other way. Maybe it's survival kicking in, but what's floating around in the air seems delusional to me.
But what are people supposed to do? There's no real alternative to oil, and they've got no hedge and no backup. So why not be optimistic? Hoping is the only plan when you've got no plan.
I don't really agree or disagree with you either way but thought someone might enjoy this bit of satire. I think your chart levels are spot on in terms of technical levels, btw. But fundamentals-wise I think if there is some drastic future supply increase or demand decrease, your target could hit or miss by a lot. I guess I don't really have much evidence that supply will increase quickly enough or that demand will decrease to convince myself it should be cheaper than it is currently. I hope that makes sense.
Here's a chart of S&P vs WTI I made recently that seems to imply oil is very cheap and *could* at least double/triple versus the S&P (very important, it's VS the S&P, so depends on what that does) before establishing a new downward trend:
Best regards to you, and I hope you at least enjoyed some of my rambling. Don't forget to hedge your bets!
fringe_chartist
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"supply increase or demand decrease" should be -> "supply decrease or demand decrease"
P_S_trade
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@a83hj9jago8w4gb2gvbczxjn35, Thank you for your comment and the great chart It is in the discussion that the truth is born And yes, our idea is based on a technical analysis of the price
louistran_016
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@a83hj9jago8w4gb2gvbczxjn35,for industrial consumption there is no alternative to oil. For the end consumers oil has reached the level of demand destruction, and EV more and more becomes a compelling alternative
BearHunterSpy
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If energy demand diminishes in my opinion , the big oil company already did this during COVID quarantine, the supply would be controlled again and also diminished. The oil companies already see that they can control price by doing this since it was proven during shutdowns of oil wells during COVID. At the end of the day the only ones that were out of the money were the ones laid off during this time since they weren’t working. Unless there’s another energy source that can actually take over what oil does the price will always be controlled.
P_S_trade
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@8048858450d34f49b47b3cde1fe90e, thank you for your comment