Oil Prices Fall Sharply

As Crude Declines For Third Straight Day, Analysts See Correction Or End To Market’s Bull Run

Oil prices dropped sharply Tuesday and other energy futures followed suit as investors locked in profits from the recent record-setting rally.

The third consecutive day of oil price declines after eight straight sessions in which futures hit new records is igniting a debate among analysts over whether the move is a correction in a bull market or the beginning of a long-term decline in crude prices.
Crude futures peaked near $84 a barrel on Thursday, the day the October contract expired. The November crude contract began its life as the front-month contract Friday more than $1.50 lower, and has declined in every session since.

On Tuesday, November light, sweet crude fell $1.45 to $79.50 a barrel on the New York Mercantile Exchange.

“What we’re seeing now is just a very normal correction in the market,” said Stephen Schork, a Villanova, Pa.-based analyst and publisher of The Schork Report. But if prices keep falling, he said, “It could be the end of the bull run.”

The key will be whether crude futures find a psychological support level at which investors are comfortable, Schork said. If they do, prices could rally again. But if prices fall through support levels in the mid-$70s, Schork said, the path could be paved for $70 oil, or lower.

CBS News