Oil Price

Reflecting seasonal supply / demand patterns, the oil price normally experiences strong
postive price action in the late winter / early spring and from the end of Jul. through the
end of Sept. Weak periods run from late Apr. through late Jul. and from Oct. through the
end of Feb. in the succeeding year.

The oil price did have a nice seasonal run up this summer, and as we approach the month
of October, when seasonal weakness normally develops, the market has started to sell down
after reaching a notable short term overbought. $WTIC chart

The sell off in the oil price this week, although abrupt, is certainly not beyond the pale of
normal seasonal activity. Despite evidence of decelerating global economic and trade growth
this year, the oil price managed a strong, postive, seasonal run this past summer, no doubt
heightened by pressure that  Israeli PM "Bibi" Netanyahu has been applying to the Obama
administration over progress Iran is allegedly making in developing weapons grade nuclear
material. The warm Romney / Ryan embrace of "Bibi" and the Likud group may have
encouraged traders as well. But, the "bomb Iran" story has again quieted down, and the
Mittster has been gaffing his way down in the polls. In addition, the rumor mill now has it
that the Saudis could step up output to calm the market.

For now then, I am simply going on the assumption that the oil price may be headed for further
and perfectly normal seasonal weakness that could run for several months. A lower oil price
would facilitate the efficacy of the recent monetary easing actions of major central banks. It
might be the case that the 2008 - 09 collapse of WTI crude from $145 bl. down to $30 has
proven instructive to OPEC, but you cannot count on this. Note also that the normal month for
traders to have bombers on the tarmac to go and take out Iran's nuclear facilities is Feb. when
oil makes its usual annual seasonal low, but do not be shocked if "Bibi" makes a final push
to kite the oil price ahead of the US election in Nov.

The $80 - 100 bl. price range depicted on the chart represents my longstanding best guess for
the oil price parameters in 2012.