On May 25, the oil price fell from $52.00 to $48.90. This past Wednesday, prices fell another 5 percent from $48.23 to $45.72.

The bottom line is not just that the traders were disappointed. Rather they are seeing lots of oil and not much commitment. After all there is no enforcement arm for OPEC. At this point the oil price charts look more robust than the shares of energy or energy service companies. In pre-market trading, oil has is already down 50 cents from the Thursday close.

One on One, this column May 8, 2017

On May 25, the oil price fell from $52.00 to $48.90. This past Wednesday, prices fell another 5 percent from $48.23 to $45.72.

The drop should not have come as a surprise to regular readers of this column. Our last few columns have warned that energy share prices are even weaker than the oil price itself.

Is this a good or bad thing? From the standpoint of purchasing fuel, well, all carbon based fuels just went on sale. No wonder airline stocks are soaring!

And his will probably generate more not less work in the oil field. The simple reason is that energy firms need the money to service debt. So far there are no reports of big lay-offs. Halliburton announced it was not offering discounts any longer just as oil topped $50. That of course is typical of peaking social mood. Brought on by a doubling of price.

On the downside, many of our readers have their retirement plans invested in the shares of energy companies which employ them. Those share prices are dropping.

The final bit of good news is that we can reasonably expect another low, like the low of February 2016. That was the time when share prices had declined to bargain prices. The headlines at the time were as negative as possible, citing a worldwide over supply. And of course that is when the markets reversed, doubling the oil price in about four months

Here is the big picture. Oil prices peaked first in the fall of 2013 around $110. Prices fell and failed to regain those highs, registering just over $105 in the summer of 2014. On the way down, prices did bounce to $60 generating a lot of false hope in the media.

Prices then collapsed all the way to $25 in February 2016. Prices then rebounded to $55, stopping short of the $60 high.

Since the start of 2015, prices have moved sideways bounded by a $25 low and a $60 high.

Oil is priced in US Dollars. But the US buck has been falling in value. But even that drop has not lifted oil prices. So the Dollar and oil are falling together.

Share prices are weaker than the oil price itself. The energy service ETF that is XES is a good example. At the February 2016 low it bottomed at $12.50. But it is already trading at $15.59. At the 2014 oil price high those shares traded hands at a high of $47.50. So XES now fetches only one-third of the price high.

I have no idea how low the price of oil will now fall, nor where shares like XES will finally reside. What I do know is that negative mood is stalking the energy shares. A crescendo of negative mood always accompanies a market bottom. Best guess for the timing of that bottom is the seasonal low in the stock market of October-November. That is a mere four months off. As we said on the way down in 2015, time to get your energy-shopping list in order. The forthcoming low should be the final low for the energy complex and complete the bottoming process begun in February 2016.

Detailed updates will appear on my weblog at http://www.themarketperspective.com

Contact Dennis Elam at dennislelam@gmail.com