My long-term outlook on oil hasn’t changed for more than a year. The long-term patterns are still bullish, despite the lack of movement in oil recently.The short-term outlook is a bit more bearish, as we could well see a move to the downside before the price continues higher.

Currently, I am not positioned in oil futures, but I do own a handful of oil stocks, which I purchased in early 2016 near the bottom. This is article is an excerpt from an email sent to the Canadian Investor Stock Signals subscribers.

Outlook for Crude Oil

My long-term outlook on crude oil remains bullish for a number of reasons.

Mainly, oil stocks and the commodity itself have experienced the crash already. With the major selloff behind us, I believe there is a little risk of another one in the near future. 75%+ declines in oil (2013 to early 2016) are rare to begin with, and are not followed by declines anywhere near the same magnitude). That doesn’t mean there can’t be short-term drops back to $45 for example, but a drop back below $30 is highly unlikely.

Below $30 we saw capitulation selling and complete disillusionment on the part oil investors. That sort of disillusionment only comes after a prolonged decline.

 Any sell-off that happens from here is likely to be more muted and on a much smaller-scale.

In early 2016 I shifted my focus to buying oil and gas stocks. I continue to hold those positions, and price action in crude oil has me believing that crude will continue to head higher, along with most oil stocks…over the long-term.

Technically, I like the reversal that we saw in 2016. After a prolonged decline a big rally occurred, and that rally erased the entire prior down wave that occurred in late 2015. The definition of a downtrend is overall lower swing highs and lower swing lows. As of mid-2016, that was no longer the case. The price made a higher swing high, negating the downtrend. The price then pulled back several times throughout 2016, creating higher lows, and then proceeded to make new highs (albeit barely).