Oil musings

Oil prices have seen a decent rally since mid-January (see chart at right). However, as they point out in the Hays Advisory Letter, "despite this latest increase in price off the bottom, not one trend line has been broken. The downward trend on the price of oil is still intact, despite this recent upward spike."

We believe that oil prices, like interest rates and stock prices, have entered a broad sideways trading range. Despite today's decline in oil we think it has a bit higher to go before it hits the top of the range. Longer-term we think once a synchronous expansion in the world economy gets underway it will put oil over $100/bbl. within 3 years.

Strategy Update: Our Dynamic Commodity Strategy is up 15.6% over the past year compared to the Rydex Commodity Fund down -15.8% (gray line) for an outperformance of 31.4%. The key to the outperformance has been to miss much of the downswings despite less than perfect participation on the upside. Visit our website: www.WindRiverAdvisors.com.