Oil’s stealthy rise (and still going)

Today, commentators are rejoicing that Brent has returned to its January 27th, 2020 “pre-pandemic” price,

and that Brent has nearly tripled from its April 22, 2020 intra-day $16 low. (p.s. the Russian / Saudi stoush broke on March 6th, 2020)

but I think it continues its march higher.

In the past week, Brent rose 8.3%, 

thus I’m revising and lowering the probability of a mean reversion to the $49 region (note: it remains probable, but less so in the near-term),

although I’m not a buyer of Brent Crude at these levels (for my risk-reward mathematics have changed),

I remain a long-term oil bull (based on my declining supply/capex thesis),

so keep in context that any decline remains one within a rising long-term trend, 

while my price action and trend analysis suggests a price of $70 is plausible in relatively short order,

a price of $84 would be where I’ll highlight an important peak.

Incidentally, this week we’ll see the U.S. CPI monthly release and more relevantly, next week’s PPI figures are announced for January 2021 will help tell us if rising oil prices have worked their way into the inflation figures.

February 9, 2021

by Rob Zdravevski

rob@karriasset.com.au