With oil rising over $100 per barrel, we look at the longer term picture. The graph below is constructed from the wellhead price of oil which has been recorded monthly from 1890. From this perspective, the 1980 bear market and the 1990 Gulf War rally appear to be minor events. From the technical viewpoint, this time series has a very long base from which a major price advance can be launched. The 2005-2020 trading range can be seen as a congestion zone. A break above that zone, which is highly likely, projects much higher prices.
Annual Oil from 1890
Price has already exceeded the 61.8% retracement of the 2008-2020 range. This suggests a run at the old highs.
Monthly Oil from 1980
Monthly Oil Histogram from 1983
As we can see in the histogram of expected return, March and April have been the two strongest months. Time cycle projections point to a high in April or May.
Price objectives are $125 and $160. The price picture is simply reflective of the fundamental developments that are cutting USA energy production.
