If you like to dabble in crude oil futures, the chart below may be of interest.
From Callum Thomas of Topdown Charts, it shows how West Texas Intermediate (WTI) crude oil prices tend to fluctuate, on average, over a given year.
While this is only an average based on historic movements seen between 1986 to 2018, it’s clear that prices tend to lift heading into the Northern Hemisphere summer before retreating towards the end of the year.
As Thomas points out, while seasonal patterns don’t guarantee that price movements will be the same year after year, it does provide an extra layer of useful analysis for traders.
“Seasonality is one of those odd indicators which are often best used as a ‘cherry on the top’ of an existing investment thesis, [meaning] you never want to rely solely on the averages of history,” he says.
“The key point [from the chart] is that a seasonal tailwind is coming into play for crude oil prices.”
After plunging by nearly 45% between October to late December last year, front-month WTI futures have bounced in recent months to $56.90 a barrel, primarily reflecting efforts from OPEC and its allies to curb crude output given growing supply from the United States.
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