The Real Reason Why Crude Oil Is Moving Lower

Posted on by The INO.com Team

As you may well know, crude oil (NYMEX:CL.Z14.E) prices have been dropping precipitously this year. In fact, they are at their lowest level in two years. I have a theory as to why oil prices are dropping.

I believe one of the great unsung victories for automobile manufacturers are the new cars they are producing that are getting, on average, an amazing 25 miles per gallon. That is a quantum leap from just a few years ago. With hybrids (cross between electric and gasoline) becoming more mainstream and more motorists turning in their old cars to buy new, more efficient cars, I would expect to see this trend continue. Better cars produce better mileage, therefore their need to go to the pump to fill up is less frequent than before.

Last week I witnessed the markets having one of their best weeks ever, up close to 4%. This strong market action for the week put a smile on a lot of people's faces, however it is still too early to confirm a major trend reversal to the upside.

I also mentioned in my last video that I liked Apple Inc. (NASDAQ:AAPL), which was making new all-time highs on Friday, along with Alibaba Group Holding Limited (NYSE:BABA) and Facebook Inc. (NASDAQ:FB). I will be checking in on those stocks today to see how they're doing. Also in today's video, I'll be looking at crude oil (NYMEX:CL.Z14.E), gold (FOREX:XAUUSDO), the U.S. Dollar Index (NYBOT:DX) and the major indices.

You are more than welcome to join in the conversation or leave your comment below this post.

It's going to be an interesting week for sure, so stay tuned.

Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

24 thoughts on “The Real Reason Why Crude Oil Is Moving Lower”

  2. The reason oil is declining is political. Russia wants a conflict with the West....well, they are getting one. Russia messes with Europe's/Ukraine's gas supply, we strike back at the heart of the Russian economy, energy. We bankrupted them once with ultra low oil prices. We will do it again if they do not back down in the Ukraine (Crimea is probably lost, it's really Russian anyhow).

    This might break out to a war with bombs and bullets, but for now it is being fought with dollars and cents.

  3. Okay, if I am to be honest, the politest response I can manage to assertions such as this is an eye-roll accompanied by "WHAT-ever!"

    1. Venuspluto67,

      You put a smile on my face and made me LOL. Thank you.

      I am intrigued with your name - I thought is was when Jupiter aligns with Mars then peace will rule the planets.

      Keep posting.

      Cheers,

      Adam

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

      Adam

      1. The handle is from the most prominent hard aspect in my natal astrological chart: Venus in Gemini squaring a Uranus-Pluto conjunction in Virgo, and indication of a irascible, rebellious loner who may have firm beliefs but nonetheless doesn't drink anybody's Kool-Aid.

  4. We are in resin (a product directly depend on oil price) business for 20 years. Not a single month analyst was able to predict the price or was able to explain why price moves so sharply. Analyst always tries to find a reason and don’t have any idea about the industry. The simplest truth is oil companies were getting very good profit for past 8 months because price was above 100 dollar. Then the oil companies became greedier and started pumping more oil and flooded market with oil. Now, everyone is losing money. 4 months from now it will be at 100 dollar again because everyone reduced production now.

    Market will balance itself.

    2. @Rana sez:

      "Not a single month analyst was able to predict the price or was able to explain why price moves so sharply."

      I called it "the convergence that destroys industrialization", starting in October.

      http://www.economic-undertow.com/2012/10/08/mother-of-all-free-lunches/

      October of 2012, with analysis.

      The idea that cars use less fuel is silly: yesterdays cars are simply sold on to other buyers. What the new cars replace are vehicles that are scrapped b/c they are obsolete or damaged in collisions. Some of these scrapped cars are high-mileage compacts like Geo Metros and Honda Civics that gained +50mpg ... the same percentage as replacements.

      Meanwhile, guzzling pickups and vans are durable, running hundreds of thousands of miles for a series of owners burning 12mpg.

      Fuel prices are declining b/c customers are bankrupt. Look @ retail across the US and onrunning recession in China.

      1. Indeed. I would add that at the grocery store where I am employed, in a very working-class suburb of a major Midwestern city, no less, I amazed at the number of huge, gas-guzzling vehicles I see in the parking lot. I call them "star-destroyers" because the sheer bulk of these behemoths remind me of the enormous triangular starships from the original *Star* *Wars* movies.

    3. Rana,

      That is why we at MarketClub trust our Trade Triangle technology which pretty much caught the entire move down.

      So far this year, profits are close to $11,000 on just one contract of crude oil.

      I appreciate your views and feedback.

      Many Thanks,

      Adam

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  5. About oil, your observation is well interesting, and quite applicable. However, we well aware that any or all such possible reasons or factors is reflected in charts, much earlier, so if we check past data, in July-2007, at around $ 152 oil formed it's historical long term top, and then after, long term bear trend resumed, which is still running, and may continued, up-to a formation of final bottom.

    In a First wave of Bear trend, in February 2009, Initial Bottom was formed around $ 47 and then due to intermediate trend movement some bounce back is observed, but Final Bottom Formation is yet remains pending, so we may get any reason or clarification decreasing oil pries, but now on-wards, except some minor bounce backs, we may find more and more down levels, and personally i will not surprised to see oil at around $ 55 or even at some more lower levels.

      1. Dear Adam,

        I am much thankful for your reply.

        Since long I am constantly observing that your study and aptitude towards study, both are in depth, and just from grass root level, and that is reflecting in a content quality of INO for all the times. I am pleased to state that this is the major reason for my preference, respect, reliability and love for INO.com.

        I am heartily congratulating you personally with your "Team INO" also wish you to achieve the best possible success by all means.

        With Regards,
        Rasesh Shukla.

  6. oil is dropping today- sure it dropped almost $2.00 this morning and now only down .10-- your title is kind of stupid!
    been writing a newsletter now for 30 years and for the past 6 years been only In oils-- it has been a great ride until lately! Don't assume all the moron pundits that are calling the fossil fuel game over. I have learned when the herd says "yes" it is time to say "no"! When goldman was calling for $200 oil that was the top and now the experts are calling for $50-$75 oil and this in my opinion might be the bottom. Oh! I forgot there will be no winter this year!! How stupid of me!
    top favorites oils I like plenty and they have been slaughtered bxe, axas, mauzf, cazff, oas, cpe, sn
    tplm and list goes on and on
    fav penny cazff----for .25 it is easily worth .75-.90
    actually penny oil related issue - chemicals for oil and gas wells espi .016 new line of credit, new business, new auditor, new direction all for .016/sh ESPI

    1. Wow. Been writing your newsletter for 30 years and still nobody has ever heard of you.
      LOL. I guess your advice and predictions don't work out too well.

      1. if you knew how to read go and read. See the result if you could actually understand it! One the Wall Street Dart Board contest of all time from the WSJ years ago and the list goes on and on and on.

        2. I believe the poo-flinging, err dart throwing monkeys have won the WSJ dart board contest too. Quite a claim to fame you have there William!

          Seriously, you right a newsletter? Do you right won or several newsletters?

          (Couldn't resist....hahaha)

          1. If his newsletter predictions are so great, why hasn't he made enough of his own money during those 30 years to retire in the Bahamas on his luxury yacht?

            Oh... I see.

    2. William,

      We appreciate your comments but this forum and blog is not meant to be a platform for you to push your advisory service.

      Every succes in the future.

      Adam

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

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