New York Mercantile Exchange (Nymex) crude oil futures and Intercontinental Exchange (ICE) Brent crude oil futures closed at $90.46 and $87.48 respectively yesterday, an all time high close for both markets, 3.86% and 3.69% above their close on the previous day. According to the Market Information Machine (MIM), when we see a rally of this nature on a day when the Energy Information Administration (EIA) provides weekly information on U.S. petroleum inventories, we typically see crude oil futures return to exceed their current level three weeks later.
Q: What happens when, on the day the EIA provides U.S. weekly information on petroleum inventories, crude oil futures experience a rally of more than 6%, and Brent crude oil futures a rally of more than 5.5%, across the previous two trading days?
A: According to the nine previous occurrences of this event, EventEdge indicates that Nymex crude oil has shown a very strong bullish edge that peaks 16 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Thursday Oct. 25, 2007) is Friday Nov. 16, 2007. Nymex crude rallies in 100% of the cases by an average of 7.2% relative to the close on the event date. The overall return of the nine cases is 7.2%, which, based on the close of Nymex crude on the event date ($90.46), provides a target price of $96.97.
If you would like to see more details of this historical edge, go to www.markethistory.com
Scott Murani covers European energy and commodity markets from London.
