The Canadian Technician

Crude Oil ($WTIC) Is Down 50% Year On Year, What Now?

Greg Schnell

Greg Schnell

Chief Technical Analyst, Osprey Strategic

Wow, it has been a bit of a year for crude oil ($WTIC) . The break of support actually occurred in September 2014 and currently we are down 50%. In August we were down 60% from August 2014. Is going from 60% down to 50% down an improvement?


We can see the huge volume piling into crude oil as it bounced out of the high $30 range. It looks dramatic. Could that be the final low? Let's look at a longer chart.

The drop from crude's 2014 high to crude oil's 2015 low so far has been 65% and down 67% from the 2011 high. From the all time high back in 2008 we are down 74.5%. In the oil price drop during the financial crisis, we were down 77.5% in less than 8 months. Why should the market care any differently this time? I've heard comments like "So it takes a few years to get back to the previous highs. Will that be any different than before?"

I must admit that I found it almost laughable when the $SPX went into the weekend of August 20th, 2015 down about 5% that one of the well known talking heads said the Fed needed to get involved right away. When the price of oil drops 50% it doesn't matter, but if stocks drop 5% there must be something the Fed can do to tighten this up. Comparing that drop to this drop looks laughable. I think that is one of the reasons that so many investors were surprised. With the oil patch wiping out a quarter of a million jobs directly worldwide, and a massive number associated / related to the oil patch, this is a big deal. A common ratio is 5:1 so that is 1.25 million jobs worldwide, not USA. This collapse is also entering its second year with no sign of a bounce. 

Its a good time to review the Canadian oil sector, the pipelines, $NATGAS, and the general health of the Canadian economy. It seems as long as Toronto's housing market is pointed up, no one believes we can be having a recession in Canada. I'll be covering that off on the webinar this afternoon at 5:00 EDT. This webinar is all things from a Canadian perspective. I will dip into the Canadian Dollar and commodities. Click here to register. The Canadian Technician. Even if you are not a Canadian investor, we have lots to share. 

Good trading,
Greg Schnell, CMT

Greg Schnell
About the author: , CMT, MFTA is Chief Technical Analyst at Osprey Strategic specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More