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Oil Closed Above $85

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Well, oil has broken decisively up from consolidation around either side of the 38.2% retracement level. For long-time readers of the blog, you’ll know that the chart above shows the oil market from its peak in July 2008 to its crash low in December 2008. From there, I’ve drawn in the various statistically significant Fibonacci retracement lines. We had been moving in a range above and below the 38.2% line for about six months but we now have moved about half way up to the 50% retracement line.

Goldman Sachs increased it’s price target on oil to $97 in the six month time frame based upon continued domestic economic progress and increasing demand in the developing world. This happened as the Saudi’s changed their perspective from $70 being a fair price for oil to $80 being a fair price for oil.

So far, this increase isn’t being reflected in the prices at the local gas station, but if it does this will be problematic for our nascent recovery.

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This is a shorter term chart that gives you more detail of the current price action in oil. You can see that the last year has provided a strong series of higher highs and higher lows, and a technical price target of $92 based simply upon the technical action in the charts.

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The chart above shows you the seasonality in the price of oil. You can see that on a seasonal basis, March is generally the seasonal lows over the past 24 years.

The seasonal factor, combined with Goldman’s fundamental analysis, and the technical aspects of the oil price chart tells me that we are likely in for higher oil prices in coming months.


CCR – Fortunate Son

In keeping up the Vietnam War history of the past few posts, I wanted to give you one of the musical requests I received. Seems that there are some readers out there that recognize the inequities of who was drafted and who wasn’t.

Your trivia for today revolves around the lead singer of CCR. You likely recall his name, but do you recall his mid-80’s career comeback? He recorded an album whose title song is heard at sporting events 25 years later. Can you name the singer, his comeback album and song?