• July 16, 2019

ELAM: Stocks Topping, crude at $52 - Odessa American: Business

e-Edition Subscribe

ELAM: Stocks Topping, crude at $52

Font Size:
Default font size
Larger font size

Posted: Sunday, June 16, 2019 1:00 am

A month ago crude oil (West Texas Intermediate WTIC) had just moved back above $62.  Suppose your omniscient columnist had whispered in your ear this guaranteed prediction.

A month from now newspaper and the internet will feature photos of oil tankers on fire, having been attacked by Iranian torpedoes. The President has sent a carrier group to the Persian Gulf.

Venezuela will have long lines of autos backed up waiting for gasoline. Riots continue in France.  Riots have broken out in Hong Kong, police are firing non-lethal ammo in both instances. 

Russia refuses to cut back oil production. The Saudis and Poland step up the arms race with Russia buying F-35s from the U.S. Protest groups form in South Texas to oppose any construction of LNG export terminals.

Okay, armed with the knowledge of that guaranteed outcome, what would you expect the price of oil to be? You would probably guess, above the previous high of $66. All the fundamental events, including outright war on the high seas, would point to it.

But that is not what happened. Instead our prediction that oil was likely to fall in price has come to pass. Today it is trading for about $52. Our point is that the media is constantly trying to link a fundamental event, a torpedo attack for example, with a change in market prices. 

The better approach is to examine how social mood is affecting the prices as shown in graphic form.  Listen to the market, not the media.

Okay enough about Socionomics 101 and Technical Analysis. It does appear that crude oil prices are bottoming for the time being in the $52 area. 

Unleaded gasoline futures are the cheapest at the start of summer driving season in years at $1.70. The XES Energy Service ETF is down a whopping 3 percent today as I write this Friday. A test of $8.25 seems likely. 

Energy XLE, XES, and Exxon Mobil are all under the four moving averages I track. Look for sideways action in oil prices and further declines in energy share prices.

The DJIA has had a nice run from   just under 25,000 to 26,059 today, but one can watch the tape and see momentum is slowing the ball has been thrown in the air and is reaching the top of its arc.  A negative mood worldwide (see opening paragraph) is taking hold. Expect lower prices in to August and September. Both the Russell 2000 and the Transports remain under their 200-day moving averages.

Twenty Democrats take the stage in two weeks. Expect a blunderbuss of charges aimed at each other and President Trump. Negative mood is set to blast off.







Odessa, TX

Current Conditions

Humidity: 21%
Winds: SSE at 15mph
Feels Like: 100°

Your Extended Forecast


High 99°/Low 74°
Partly cloudy. Lows overnight in the mid 70s.


High 98°/Low 75°
A few clouds. Highs in the upper 90s and lows in the mid 70s.


High 100°/Low 75°
Abundant sunshine. Highs 98 to 102F and lows in the mid 70s.
Online Features

Pet Central


Having a pet is a lot of responsibility, and we’ll help by giving you lots of tips and tricks! More >>



Our fitness articles will help teach you how to work out with gym- and home-based exercises. More >>



Enjoy the crosswords challenge in our free daily puzzles, from the harder Sunday crossword to the quicker daily. More >>



Every Sudoku has a unique solution that can be reached logically. Enter numbers into the blank spaces so that each row, column and 3x3 box contains the numbers 1 to 9. More >>

  • ALL-ACCESS: Subscribe to our e-edition and premium website at myoaoa.com.
    You can read your daily newspaper without taking a walk to the driveway.
    Look back at yesterday's newspaper, or issues from months ago with our archive feature.
    Call circulation at 432-337-7670 to sign up today.