West Texas Intermediate crude oil has seen a precipitous drop over the last 52-weeks. Having traded over $106 at this time last year, the U.S. benchmark for oil is trading under $90 a barrel and down more than 4% for 2013. Charles Nenner of the Charles Nenner Research Center says crude is nearing a bottom and may be heading higher for grim reasons.
He's looking for a near term low just under $85 sometime in the next week or two. Nenner says the crude catalyst is based not on economic strength but a global conflict, likely stemming from the Middle East. "My cycles show that we're going to have a major conflict starting this year," says Nenner with stunning pragmatism, "and that is a very good reason why oil prices could shoot up."
Having forecast a major geopolitical conflict, the obvious question is to ask what that might mean for natural gas prices. In Nenner's view nat gas is going to give back the one year double he predicted on Breakout more than a year ago.
Now he sees natural gas in a trading range but only as a weigh station on the way back down. "There's a big down move coming, but not yet," he concludes. If and when that sell-off manifests itself the old lows well under $2.00 are Nenner's target price.