Below is a chart of West Texas Intermediate from 1988 to 2022, reflecting Price Momentum data.
From what we highlighted in the Price Momentum Indicator for Natural Gas, there can be a dip in the indicator from the prior peak and then a retest of that peak level. For Natural Gas, this led to an additional increase of +144%. We’d like to avoid misjudging that going forward and recommend review that Price Momentum found here. We don’t see a set up for a similar action in the price of WTI however, we can’t brush it aside considering the inherent volatility of commodities.
Looking at the cyclical trend in the WTI, we find the following data:
By all measures, the latest increase from the April 2020 low has been exceptional. To continue to play the increase is too aggressive for our taste. Better to consider the prospects when/if the price declines a minimum of –52% or more.
see also:
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Natural Gas Downside Targets May 22, 2022
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Purchase of XOP April 23, 2020
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“Crash In Oil: Price is Your Guide” April 22, 2020