Much has been made in the past few days regarding the impact upward movements in the price of oil are having upon the markets. Pundits are throwing around various numbers for possible targets for all. These are little more than educated (being polite here) guesses. However, what is a fact is the current upward trend of oil, something which seems to have taken people and industry by surprise. Its almost as if executives woke up one day and went……Shit oil has been going up…..what will we do……we never ever conceived of this ever happening.
Wio said an MBA was a waste of money.
Interestingly, the people who this seems to surprise the most are oil companies themselves. Its as if people who work for oil companies know nothing about oil and are in a state of perpetual surprise that the price actually goes up and down. I say this because when I filled up the old bus today petrol was considerably more expensive than it was the week before. Yet, if you know something about the refining process the juice I stuck in my car was not dug out of the ground, refined and transported to my servo last night. it was probably done when oil was sitting around $US 80 a barrel. Still what would industry be without an honest attempt to rip people off.
Back to the notion of being surprised at the lift in the price of oil. The chart below is a basic chart of brent crude. On this chart I have highlighted the times when oil hit a new 52 week high. There is nothing magical about this tool it has been around for generations. Notice how it does a reasonable job of highlighting the emerging trend in oil.
So you can see it is not that hard to come to grips with the notion that prices trend and that these trends can be monitored without too much effort. This chart only shows the 52 week high because if you were a purchaser of oil or petroleum products like an airline it is in your interest to know when your major consumable is setting course for the moon.
The chart below shows the 52 week high and 26 week low and is more of a trading approach to monitoring prices. I have opted to look at crude with this sort of asymmetrical approach because I am not convinced of the complete symmetry of the oil market.
Now before everyone rushes off to program this in whatever program you have note – this is not a trading system it is simply a monitoring system. But it does show you how easy it is to put together ideas to monitor markets. Pity folks with MBAs dont have the intellectual horse power to realise the power of simple tools.