Not too many weeks ago, I noticed that the price of a gallon of regular, unleaded gasoline at a convenience store pump on North Broadway in Boulder was the lowest I’d seen in the better part of quite some time. I had to look twice: $1.99 a gallon — did I see that correctly? Indeed.
It didn’t last long: the next time I noticed, the price exceeded $2 again and today I see that a gallon at the same pump will now run you $2.59.
So I buy 10 gallons a few weeks ago and it costs me $19.90, right? I buy 10 gallons today and it costs me $25.90?
Doing the quick math in my head without the aid of a pocket calculator, I estimate that’s a more than 20% increase in just a couple of months. I don’t want to even think about the annualized gain.
So, I decided to take a look at the oil price charts and see what’s been going on. Sure enough, it’s been getting more and more expensive to fuel up — not just in Boulder, but globally.
Here’s the daily price chart for West Texas Intermediate crude oil:
Similar to the pattern seen in the stock market, the late December low marked the bottom and it’s been up, up and away since then.
You can see how 2 of the most basic technical analysis tools might have shown you the way. Above the price chart, it’s clear that the relative strength indicator is positively diverging from the November low to the Christmas Eve low. Below the price chart, the moving average convergence/divergence indicator is doing the same thing.
Now above the uptrend line and above the Ichimoku cloud, price may be headed for the previous peak of 77, established at the beginning of October, 2018, the last time sellers took over from buyers. What a trip.
Here’s the weekly crude oil chart:
From this longer-term standpoint, you could say that the price of oil has been trending upward since early 2016 — even including the late-in-the-year dip of 2018. The moving average convergence/divergence indicator (MACD), below the price chart, moved from “down” to “up” by late January of this year.
Technical analysts will be looking to see if the price can rise above the Ichimoku cloud — that would be a signal of real strength.
Here’s the monthly chart:
From this even longer-term perspective, the price of oil remains in a downtrend from the 2008 high of 145. You can see that, although it recovered following the financial crisis of that year, the price dropped even lower in early 2016. The triangle pattern now appearing suggests that the next move may be significant — either above or below the trend lines.
The 3 levels above the current price to watch: 1) where it takes out the Ichimoku cloud at 70. 2) where it takes out the 2018 high just above 75 and 3) a monthly closing price above the down trend line now just above 80. That’s quite a few resistance levels for this powerful rally from late December, 2018.
I do not hold positions in these investments. No recommendations are made one way or the other. If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.