Crude Oil: How good is the seasonal pattern until the end of the year?

Crude Oil often exhibits a strong seasonal trend in the latter months of the year, particularly heading into Q4. Historically, prices tend to rise due to increased demand and specific supply factors, creating an appealing chart pattern. However, the hit rate reveals mixed results when running a backtest on this seasonal trend. While not overwhelmingly strong, the pattern still holds enough reliability for broader analyses. It’s a beneficial additional factor for a well-rounded strategy, particularly when combined with other indicators.

The Seasonality Analyser can help visualize these nuances and assess when such patterns are beneficial to incorporate into your trading decisions.

Seasonal Analysis & Backtest

As the following seasonal chart shows, there was a historical downtrend from October 9 until almost the end of the year.

The seasonal statistics also show that the last three months were negative months on average.

Let's check how good the seasonal pattern in Crude Oil is

We analyse the period from 9-Oct to 8-December.

If you define a backtest for the period in the Seasonality Analyzer, you can see that the hit rate over the last ten years has been 70%, and the average gain has been about 12% per year.

The backtest shows that we had three losing years in which prices rose in the selected period. However, the increase was slight each time.

Major Commodities - Seasonal Overview

Here is a seasonal comparison of the major commodities. Period again 9-Oct to 8-December.

It is easy to see that crude oil has the weakest seasonal pattern.

Summary: Crude Oil's Upcoming Seasonal Pattern

Crude Oil exhibits a noticeable seasonal pattern during the last months of the year, often showing a strong downward trend. While this trend looks appealing on charts, a detailed backtest reveals that the hit rate could be a lot higher. However, the pattern is still reliable enough to be used as an additional factor in a broader trading strategy. Incorporating this seasonal insight alongside other analyses can help traders make more informed decisions and enhance overall performance.

We are excited to see how this year goes.

To capitalize on this seasonal trend, it's crucial to analyze historical trends, and run backtests, ensuring that your strategy is aligned with the patterns that have shown consistency over time. Tools like the ones available at Seasonality.ai can help you fine-tune these approaches by offering in-depth backtesting, probability analysis, and historical comparisons.

If you have any questions or suggestions, please do not hesitate to contact us.

For more information and analysis, visit Seasonality.Ai.