Next Crude Price Plunge Has Commenced

Posted by Josef Schachter - Maison Monthly

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Ace Analyst Josef Schachter Sees Six Reasons For A Substantial Energy Decline:

During the recent robust move up in crude, the conventional wisdom and commentary in the media was that the crude price bottom was in place and that the price of crude would lift to US$70-$80 by late 2016. This euphoric phase lifted energy stocks to lofty heights, and in our opinion, excess valuation. Many stocks at the top last week were discounting $US70/b. The S&P/TSX Energy Index rose from 126 in mid-January to over 200 last week. It has now retreated and commenced another corrective phase as markets and investors overplayed the rise in crude and with the recent breakdown in crude prices have seen a start of a new down leg.

Screen Shot 2016-06-17 at 6.40.20 AMSo why are we back in the bear camp? We see six issues that collectively will drive crude prices down to the low US$30’s over the next 4 months. The issues are highlighted below with further explanation of each issue.

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