Crude Oil: 23 Years of Spot-on Forecasts You Can Fact-Check

November 9, 2022

For commodities like crude oil, supply and demand factors aren’t everything

By Elliott Wave International

Everyone who drives a car is relieved that gas prices have dropped from what they were a little while back.

However, if one major Wall Street firm is correct, get ready for higher prices at the pump again. This is a Nov. 1 headline from Markets Insider:

Tightening oil supply will drive crude oil prices to $115 a barrel by April, Goldman Sachs strategist says

Of course, higher crude oil prices mean higher gas prices and vice versa.

But does a “tightening oil supply” mean higher crude oil prices? Well, that’s certainly conventional wisdom, but as Elliott Wave International has observed over the decades, you cannot count on conventional wisdom.

Indeed, Chapter 22 of Robert Prechter’s landmark book, The Socionomic Theory of Finance, asks:

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Do Supply and Demand Regulate Oil Prices?

He goes on to answer that question by saying:

The correct answer is … no, they don’t. In this chapter, I support my conclusion and demonstrate its value.

In a nutshell, Elliott waves regulate the trend of oil prices and the successful calls Elliott Wave International analysts have made over the years offer strong evidence for this.

Keep in mind that as you look at this chart from the book, it took Robert Prechter 43 pages to go into the details of how Elliott wave analysis called every major price turn in crude from 1993 into 2016:

Indeed, the very title of the chart says it all:

Elliott Wave Analysis Forecasted And / Or Recognized In Real Time All Of These Waves And Their Turning Points

Keep in mind that no method of analysis offers guarantees, yet — looking at what’s going on now — the October Global Market Perspective, a monthly Elliott Wave International publication which covers 50-plus worldwide financial markets, noted:

Crude extended its string of lower lows and lower highs in September as anticipated.

The October Global Market Perspective goes on to provide a forecast for crude oil.

Looping back to that crude oil price target by the major Wall Street firm, that price may at some point be hit. The point is that it’s best to consult the Elliott wave model rather than basing a crude oil prediction on supply and demand.

If you’d like to learn about Elliott wave analysis, or need a refresher, an excellent resource is Frost & Prechter’s book, Elliott Wave Principle: Key to Market Behavior. Here’s a quote from this Wall Street classic:

After you have acquired an Elliott “touch,” it will be forever with you, just as a child who learns to ride a bicycle never forgets. Thereafter, catching a turn becomes a fairly common experience and not really too difficult. Furthermore, by giving you a feeling of confidence as to where you are in the progress of the market, a knowledge of Elliott can prepare you psychologically for the fluctuating nature of price movement and free you from sharing the widely practiced analytical error of forever projecting today’s trends linearly into the future. Most important, the Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress. Living in harmony with those trends can make the difference between success and failure in financial affairs.

Would you like to read the entire online version of Elliott Wave Principle: Key to Market Behavior? If so, you may do so for free once you become a member of Club EWI, the world’s largest Elliott wave educational community.

A Club EWI membership is also free and opens the door to complimentary access to a wealth of Elliott wave resources on investing and trading, including videos and articles from Elliott Wave International analysts.

You can have the book on your screen in moments as you follow this link: Elliott Wave Principle: Key to Market Behavior.

This article was syndicated by Elliott Wave International and was originally published under the headline Crude Oil: 23 Years of Spot-on Forecasts You Can Fact-Check. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.