Oil Price

1) My base case for the oil price in 2013 is a range of $85 - 105 bl. WTIC to be paced
primarily by stronger demand in China and the various QE programs by major central banks
which can positively influence physical demand and price speculation from financial players.

2) Political stability issues in both the Middle East and North Africa to include a re-focus on
Iran's nuclear development program could easily pop up and drive the oil price sharply and
temporarily higher.

3) The oil price at around $97.50 bl. is now at the top of a huge pennant formation dating
back to  mid - 2008 (top of downtrend line) and early 2009 (bottom of uptrend line).
Oil Price 10 Year Chart It is interesting but not at all atypical that the oil price has not been
able to take out the price bubble highs of mid - 2008 and it is at least as interesting that the
price has settled into a very leisurely trend up from the early 2009 low. This triangle or
pennant formation looks to close out late this spring in the low $90's per.

4) Near term, oil did follow its normal late year seasonal pattern and allowed those interested
in the long side to accumulate positions. This seasonal window closed in Jan. of 2013, as oil
maintained its Dec. uptrend through a normally weak seasonal period. Feb. is also a seasonally
weak month and the market could still bow to seasonal forces (Late Feb. is usually when pit
traders and pundits put the bombers out on the tarmac to attack Iran and try to jump start a
rise off a seasonal price low).

5) The oil market is presently overbought short term and this is especially noteworthy now as
there is another month of possible pronounced seasonal weakness to work through before the
ramp up for the Northern Hemisphere driving season. WTIC Technical Chart The USO
exchange traded facility is featured in the bottom panel of the chart.