Investments

Oil Is Moving Higher

Oil has rallied and will likely move to the $64-$65 level by the end of January.

Here is the reasoning that supports higher prices:

  • Oil rose in November, normally a weak month. When oil has risen in the month of November in the past, it has increased in 10 of 13 cases in the month of December. (When oil has fallen in past Novembers, oil has risen in only 9 of 23 cases in December.)
  • In the average month, December has been up in 53% of all cases.
  • As we see in the monthly histogram of expected return, price has passed through the seasonally weak period and is moving into a seasonally stronger period in the first quarter.
  • The monthly cycle is in an ascending mode and rises into February.

The monthly cycle does dip from December 19 to January 6. This will likely bring a short -term overbought correction. The 24th is likely a low.

Chart 1: Monthly Annual Expected Return-Oil

Oil Is Moving Higher

Oil is moving into the strong part of its seasonal cycle.

Cycles Research Investments LLC

Chart 2: Oil Monthly Cycle

Oil Is Moving Higher

The monthly cycle rallies into January.

Cycles Research Investments LLC

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