Energy printing fresh highs within weeks

3일 전

Here's a better chart than the one shared in October, showing that energy has been consolidating above an upward sloping triangle formation, over 900 days in the making.

With just under 4% remaining to reach prior highs set in April, fresh highs could be just weeks away. Looking at the height of the triangle to project potential gains, there could be a whopping 30% upside ahead.

Lately I've stepped back to ponder the fundamental underpinnings of this move. During the same period, the price of oil has cratered by 40%.

Charting XLE/BRENT shows an astonishing double during the bullish XLE triangle formation


Could it be something to do with the hot war in Ukraine? Anecdotally we know OPEC+ (Saudio Aramco et al) has continued to hold on output increases, while their western peers (XLE) are pushing more product than ever. One theory is XLE companies have taken market share to account for the decline in prices.

Two questions remain:

• would oil prices in the $40's be enough to tank XLE shares?
  
• if XLE can hold historic value during a deeper oil price decline, where could its valuation be headed during the next bull cycle in oil?