Interactive Investor

Why oil prices could be heading lower again

8th February 2023 07:50

Alistair Strang from interactive investor

Following a period of inflated prices, the cost of oil has been falling. Independent analyst Alistair Strang reveals what the charts say will happen next.

    With oil company BP (LSE:BP.) announcing their highest ever profits, we thought it time to take another look at the price potentials for crude oil.

    We’ve a slight suspicion attempts are being made to keep Brent Crude artificially high in price, despite plenty of visual suggestions it wants to reverse.

    At time of writing, Brent is trading around $83 a barrel and need only drip below $79 to make a visit to the $75 level very probable. Our secondary target level, if such a price breaks, works out at $65 and effectively a return to the price of Crude before the world fell apart in 2020.

    As the chart below highlights, it makes some visual sense.

    Our converse scenario requires Brent to trade above $88 if any miracles are planned, as recovery to an initial $93 looks very probable with our secondary, if beaten, working out at $99 and some probable hesitation, especially given the presence of the Blue downtrend on the chart.

    For now, the visuals tend to imply, quite strongly, that a visit to the $65 level should surprise no-one.

    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. 

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