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WTI Monthly Chart
To start with the monthly chart, starting from the year 2008. After reaching an all time high of nearly $147 per barrel, WTI hit a low of almost $32. The fundamental reasons of this crash were not surprisingly: the financial crisis and the worldwide economic downturn. Deleveraging (forced liquidation of positions) also contributed to the crash of 2008.
Nevertheless, WTI managed to recover a big part of the crash in the following years. From a low of around $ 32 in 2008, WTI rallied to an intermediate high around $115 in May 2011.
WTI Weekly Chart
The Weekly chart illustrates the 'nice' downtrend in the period May until October. The (European) debt crisis during 2011 and also the short dispute concerning the debt ceiling of the United States, were hammering the confidence. This resulted (again) in a slowing economy, which put pressure on oil demand.
The daily chart below, shows the recovery from the low of 2011 around $75 to $100. This round (natural) number is now being challenged. A successful breakthrough might pave the rising path towards the peak of 2011, around $115, with the provision that WTI manages to stay above the support level of $75.
WTI offering opportunities
The world eyes remain on China, whose economic role in the world continued to grow in importance. Although China's growth came under pressure this year, a growth rate of 9.5% is still expected for 2011. In 2010, the Chinese economy grew 10.3%. This means that China's demand for commodities, like oil, still will be high.
The fact is that, although WTI corrected during this year, the year to date return (in US dollars) is over 10%. If the world economy does not detoriate too much, depending of the resilience of the American, European and Chinese economy, WTI might be a promising investment (again) in 2012. Of course, results in the past are no guarantee, but if you stay focused on opportunities and manage risk well, you will have a prosperous future; hopefully beginning in 2012. I wish you a wonderful 2012.
Jerry de Leeuw, Managing Director, Mercurious
