Recently there have been many discussions on the effective role played by the 2nd Third Party Report (TPR-2), and by other news about the E-Cat, in the sharp fall in oil price observed in the world financial markets during the last two months.
I asked an Italian trader who in the past has invested in oil market, and who wants to remain anonymous, his opinion on the subject. Here’s his reply:
“In the last 10 years I have invested in oil more than in other commodities or financial indices/markets because I found the behavior of oil market much more predictable. This was until the end of 2011, when I was one of the first Italian investors to read about the E-Cat and to consider this technology a possible game-changer. I realized that sooner or later the oil price would collapse and then with regret I kept away.
In order to answer your inquiry, I had a quick glance at some public data and at analysis on the subject already published by others, and I found three clear ‘signatures’ on the charts – two of which are completely new, and one can be considered a ‘smoking gun’ – showing that the fall in oil price is closely related to the recent news about the E-Cat.
The three ‘signatures’ are well visible in the following pictures:
Fig. 1 – You can see, from the 10-year chart above, that normally on the long term there is a quite good correlation between the oil price and the stock market (here represented by the American S&P 500 Index), being the oil an increasingly scarce resource.
I mean that the price of oil, in the last 2-3 decades, has always had a tendency to rise, except in times of great economic crisis (as in 2009, when collapsed). But at this time we are not in one of those periods, so the last sharp fall visible in the oil graph is due to an extremely powerful ‘exogenous’ factor. In the following graphs it will result quite clear what is this factor.
Fig. 2 – The more technical chart below, used by traders and first appeared on November 28 here in a post published in the Sifferkoll blog, shows in detail the strong correlation among some recent news regarding the E-Cat and the daily movements of the oil price.
We can see that the beginning of the fall in oil price coincides, on the graph, with the release date of the TPR-2, also known as ‘Lugano Report’, i.e. October 8, 2014. I have added this information on the chart because it was not provided in the original picture.
This is the most important event together with the article appeared the following day on the Elforsk’s website written by the CEO of such company, Magnus Oloffsson, and both are clearly responsible for the so-called ‘4 year channel breakout’.
We also see that the sharp cumulative fall of the oil price is, in reality, the sum of many sales on the oil market triggered also, in the following days, by the many other ‘minor’ news about the E-Cat appeared in the media and quite well illustrated on the chart by its author.
Fig.3 – As you made in your post on the E-Cat popularity, I used – to analyze the issue – Google Trends, which is very powerful tool, and I made a surprisingly discovery. I consider the latter a likely ‘smoking gun’ of the intriguing relationship between the most important recent news about the E-Cat and the sharp fall of oil price. It also gives us an idea of its strength.
If you type on Google Trends ‘Oil price‘ and, later, ‘E-Cat‘, you find (as clearly shown in the picture below prepared with your precious graphical help) that the number of searches for the first term is about 5 times greater, as I would expect, because searching that term are mostly investors, much more numerous than the fans who follow the E-Cat.
Well, if now we compare the trends graphs relating to searches for these two terms – ‘Oil price’ and ‘E-Cat’ – in the last year, we find a clear spike in both the searches corresponding exactly to the same period: October 8-12. Since the fans of Rossi’s E-Cat are far fewer than world investors on oil, this means that investors were very careful to follow the release of the Second Third Party Report, announced long before, and they promptly sold”.