Oil Analysis

The oil service to airlines ratio (top series in the chart) remains at a critical inflection point. The series can either test the power down trendline (PDT) or swing low. Failure of either will portend higher and lower oil prices, respectively. Since COT money flows suggest another downleg on the U.S. dollar is near, probability favors the former.

Oil Service to Airline Ratio (OSXXALR):


Gold remains the choice over oil as long as the trend remains below the historical channel mid point. The real oil price suggests that a break in the mid point trend occurred in 2008. The subtle changes within the trend, most recent 1986 and 1931, reflect economic changes that can last for years.

Oil to Gold Ratio (OILGOLDR):