Most analysts are still predicting $20-$30 per barrel oil within months (NYSEARCA:USO). As oil falls today, the charts just simply do not show another 50% downside in the next few months. In fact, the fundamentals are showing downside less and less as well. As more and more rigs go offline in the United States, oil production is coming down. In addition, continued stimulus by China and Europe and a 'stable' U.S economy does not show a dramatic decline for crude demand on the horizon. The supply demand curve is easy to read and it is predicting a stable to higher price on crude.
If you look at the weekly (NYSEARCA:USO) chart, it clearly has a bull flag forming. Note the chart below. As always, analysts are behind on the calls, they are too bearish at lows and too bullish at highs. The small investor needs to step up and learn the charts, profits will quickly follow.
Gareth Soloway
Chief Market Strategist
