Oil prices are set to form a bottom in the coming months, McClellan Financial Publications analysts argue.

Recent gold price trends, adjusted forward by 19.8 months, can be compared to prices, a shift that aims to highlight how gold’s price movements tend to echo in oil prices after that specific interval.

While not a flawless model, it generally provides strong accuracy, the report states. Occasionally, discrepancies occur, such as when Russia’s invasion of Ukraine disrupted the oil market. However, after each such divergence, prices consistently strive to realign and return to their historical correlation.

“Coming up, this model says that we have a bottom due in mid-2024, followed by a rise toward the end of the year,” The McClellan Market Report says.

“That oil price rise is not going to be good news for any federal politicians who may be running for reelection in November. And if the recent rally in gold prices (just off the right end of this chart) keeps going higher, that is going to mean higher oil prices 19.8 months later,” it added.

In late 2023, crude oil prices declined earlier than expected, missing the predicted peak that gold price movements had indicated would occur later that year. However, oil prices have since realigned with the pattern, the report highlights.

The forecast indicates that the forthcoming bottom will ideally occur around June or July 2024. That said, it’s worth noting that turning points might not precisely follow this timeline and could occur slightly earlier or later.

The key takeaway is that a bottom is expected, though more price declines may occur before reaching that point.

“Then as summer gets closer, we should turn to other indicators to home in on signs that the price bottom for oil is arriving, and/or that an upturn is starting,” the report notes.