Interactive Investor

What are the chances of oil prices hitting $122?

16th September 2021 07:38

Alistair Strang from Trends and Targets

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The price of oil has gushed higher, so independent analyst Alistair Strang examines potential for a surge to triple digits for the first time since 2014.

We last reviewed Brent crude as recently as June, warning of implications should the price manage to bubble above the $75.50 mark.

Today, noticing the commodity was again tickling this level, panic ensued with an immediate call to our oil dealer. Here in Argyll, we’ve been turning the heating on in evenings as the weather has sharply deteriorated.

As there’s no regulatory body keeping an eye on oil prices, heating oil purchases can become an alarming cost, when world oil markets soar. Our tank is being filled this week, the price thankfully not surging yet.

The chart below is a weekly view for Brent crude and the blue line dates back to 2012 when Brent hit a high of $130. The market is clearly showing a lot of respect for this trend line and we’re expecting the worst.

As a result, we’ve taken a further look at the tea leaves as the visuals now imply the price need only exceed $78 anytime soon, with fireworks possible thereafter. From a near-term perspective, there are plenty of arguments suggesting such a movement is very possible.
 
Above the $78 level now suggests continued travel toward $96 initially. If exceeded, our secondary calculation brings the potential of a high at $122. This will doubtless be great news for those holding shares in oil companies. But folk forced to purchase heating oil will doubtless remember the ‘jaw drop’ prices being asked, last time crude oil surged above $100.

Source: Trends and Targets. Past performance is not a guide to future performance.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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