Crude oil prices have dropped from about $106 in June of 2014 to briefly under $30 in January of 2016 – down about 74% peak to trough.This appears to be an on-going disaster for oil companies, the banks who loaned money to frackers, oil exporting countries, global stock markets and others.

Conventional wisdom suggests that crude oil prices will stay low for a long time because of low demand (global recession), huge supply (Iran, fracking, etc.), decline in commodity prices globally, and at least ten more reasons.

Maybe!

But crude oil prices have crashed before and then rallied.Examine the following chart and the 4 step sequences shown.

Note the following “1” to “2” down legs shown on the chart.They are:

Date                    High (1)              Low (2)               % Drop  

9/90 – 4/94          40.10                  13.90                  65%

10/00 – 11/01     36.90                  17.12                  54%

7/08 – 12/08        147.20                35.35                  76%