Oil ETFs are trending downward, and one oil analyst is saying "I told you so."
Larry Edelson, a veteran commodities analyst and the editor of Real Wealth Report and Supercycle Trader, says in a recent research post that crude oil prices are down 14% from an October 19 high, and it's no secret why.
"Plunging crude oil prices and a severe loss in credibility has OPEC playing defense and concocting a new strategy," says Edelson, who earlier predicted the OPEC oil production deal announced last month was "doomed to fail."
"It's becoming increasingly important for Russia, Saudi Arabia, Iran and Iraq to sharpen their pencils and hash out a deal at the November 30 OPEC meeting," he notes. "And still, that may not be enough to maintain relevance and engineer higher crude oil prices."
With oil demand low for OPEC nations, Edelson is calling for a big low in oil prices early in 2017. "My forecast remains bearish crude oil, with a low not in place until early next year ... probably, believe it or not, below $26," he says.
Certainly, the long-term trend has been a downward one for oil. The short term hasn't been so great, either. The benchmark United States Oil (OIL) exchange-traded fund traded off 1% on Friday, and is down over 9% year to date. The VelocityShares 3x Long Crude Oil ETN (UWTI) fell by 5% in Friday trading.
Additionally, oil futures fell 2% last week on the negative OPEC production news, but rallied Monday after Democratic U.S. presidential candidate Hillary Clinton was cleared of any wrongdoing regarding her handling of classified government material, just ahead of the U.S. election on Tuesday. Also on Monday, Russia agreed to participate in OPEC's oil production curb, and an earthquake severely damaged a key Oklahoma-based crude-storage hub, alarming commodities traders about supply conditions.