Oil seems awfully undervalued on a technical basis….
The below chart shows the WTI Spot price over the period of January 1986 to January 2019 . On the 08 January 2019 it was trading around 49.73.
In the below I plot the previous 125 days against other similar historical periods that would have closely matched the recent history. The data has been normalised so as to be on the same scale. The chart shows the latest 125 days in black, and overlay similar historical patterns in grey. It Also shows what has been the price path for the following 125 days as well as the observed quartiles.
Finally I plot the last 125 days and a trend forecast derived from an ARIMA(4,1,1) model as well as the 95% confidence intervals. The ARIMA model is fitted to the past 625 historical values whilst ignoring the last 125 days, therefore we can look at the recent price path against the trend forecast and its confidence intervals to gauge how (a)typical the recent move has been.
