Fibonacci sequence tells of short-term crude price slump

22/05/2009

Analyst group JBC Energy is predicting that crude oil prices will suffer a dramatic slump and will hit $45 a barrel before picking up again towards the end of the year.

Speaking to Bloomberg, Johannes Benigni, the chief executive of the Venice-based group, explained that the prediction had been made using the Fibonacci sequence, also known as the golden mean.

The group used data of rallies and slumps in previous years to predict where the falls are likely to come in the short term, with the calculations suggesting that a dramatic slump is imminent.

"The recovery was too early and as oil market fundamentals look extremely bad a correction is expected," said Mr Benigni.

Such a scenario would likely have a knock-on effect on the price of heating oil, DERV and gasoline prices.

In trading this morning (May 22nd), wholesale heating oil prices tracked crude prices upwards on the New York Mercantile Exchange, after following the commodity down yesterday.