New Bull Market for Oil?

Based on the standard bull/bear market move of 20%, oil is already well into a new bull market with its move of 44.7% since its closing low of $33.87 on December 19th. Since 2000, the average oil bull market has seen the commodity rise 89%, while the average bear has seen oil decline by 39%. The 88-day decline in oil from 9/22 to 12/19 of 72% was by far the steepest drop the commodity has ever seen without a 20% rally.

The last four bull and bear markets in oil have all come within 6 months, highlighting the extreme volatility in the commodities market. As shown in the bottom chart, the number of days that the last four market cycles have lasted has been much lower than normal. It's likely that we'll continue to see these big swings in short periods of time until the financial markets cool down.

click to enlarge

Comments

[Greg Pinelli:]

The slamming of oil in 2008 was a unique event...it guaranteed that the next go around was going to be sudden..and involve very dramatic price surges. The financial crisis and the ensuing shutdown of oil and gas development meant that a percent 2 or 3x the demand destruction was taking place. This is the why of the dramatic increases in equities like PWE..LGCY and LINE (among many others).
Depletion (6-8%)+Shut In Development (5-10%?)=4% Demand Destruction...NOT
Oil willbe at the $60 break even point soon..add a minimum 10% profit for the risk..and that is modest...and we're at $66.00 before you can say Phil Flynn's an Idiot....

Jan 06 08:49 PM

[ILL PA.:]

I THINK THAT == CHK == HAL == PBR == ARE EXCELLENT PLAYS FOR 2009.

Jan 07 01:19 AM

[Henrique Si...:]

Eric Bolling, the veteran trader is buying USO when oil futures are below 45 USD:

oiltradersblog.blogspo...

Jan 07 01:00 PM

[geolog:]

Hello,
I would like to inform you, that to significant increase of exploration success and company energy potential there is new technology for oil/gas detection.
With new exploration technology (patented invention US 7,330,790) oil industry could make up to three times more oil and gas discoveries than when using conventional technology. And the fact that new technology won't need more investments is also very important. It can significantly increase company dividends.
The technology is designed and successfully tested in the Barents and the Black Seas as well as in the Gulf of Mexico (see: binaryseismoem.weebly....).

Jan 07 07:29 PM

[palmeida@bo...:]

On your first chart, you have the average Bull days and the average Bear days reversed. The average Bear days should be 109, not 334 according to your chart. Average bull days is 334, not 109.

Jan 09 11:13 AM