According to analysts at McClellan Financial Publications, oil prices are expected to bottom out in the coming months.
Recent price trends of , adjusted by 19.8 months, can be compared to prices of , a change which is intended to highlight how movements in the price of gold tend to be reflected in oil prices after this specific interval.
Although not perfect, this model is generally very accurate, according to the report. Divergences sometimes occur, as when Russia’s invasion of Ukraine disrupted the oil market. However, after each of these divergences, prices continually strive to realign and return to their historical correlation.
“This model predicts a bottom in mid-2024, followed by a rise toward the end of the year,” the McClellan market report said.
“This rise in oil prices will not be good news for federal politicians running in the November election. And if the recent rally in gold prices (just at the far right of this chart) continues, this will result in higher oil prices 19.8 months later,” the report added.
Third-party advertising. This is not an offer or recommendation by Investing.com. Read the warning here Or
remove ads
.
As 2023 draws to a close, crude oil prices fell earlier than expected, missing the peak that gold price movements had indicated would occur later in the year. However, oil prices have since realigned with the trend, the report points out.
Forecasts indicate that the next trough should ideally occur around June or July 2024. That said, it is worth noting that inflection points might not precisely follow this timeline and occur a little earlier or a little later.
The bottom line is that a bottom is expected, although further price declines may occur before reaching that point.
“As summer approaches, we should look to other indicators for signs that the price of oil has bottomed and/or that a recovery is beginning. “, notes the report.
